Islamic Mortgages

s.sunni

Hi.

I have a question about Islamic mortgages. I myself am a Muslim, and i wanted to have a mortgage which was consistent with my faith. As such, they are many bank nowadays which claim to offer these.

Examples include HSBC Amanah, Lloyd's Islamic Finance, Islamic Bank, etc. Even Barclays are thinking of starting off something. The way it works is this:
-the bank will pay 90% of the property, and you will pay 10% (for example)
- an agreement is setup between you and the bank that the house is owned by the bank, and a tenancy agreement is setup, which allows you the right to live in the property.
- every month, you'll pay the bank monthly repayments, which consist of rent to the bank and repayments for the house (ie, you pay for shares in the house).
- over the years, as you pay more rent, you will gradually own a greater share in the property, until eventually you fully own the property and the bank transfers the property into your name.
- the agreement is set for a limited number of years (eg 15 or 30 year term contract)

The whole point of Islamic mortgages is to have a system which avoids paying interest, so instead they pay the bank 'rent'

I am currently with HSBC Amanah to mortgage my house, with the above system.

When i went with them initially, i was under the impression that i will be paying a fixed rate to them, so that my monthly repayments will stay the same throughout the years. I was very surprised then that my repayments increased quite significantly only in the first month. The reason the bank gave was that the rate for the 'rent' to the bank had actually been increased.


Does anyone here have any more info or any input on this?..
I would be quite interested to here if you have any experience with this, or which Islamic mortgage they think is the best?..

Thanks

dmg24

You need to check your mortgage offer, and the Key Facts Illustration that you will have received prior to agreeing to the mortgage. The relevant information will be in there.

maninthestreet

The 'rent' increases probably take into account rises in the BoE base rate - even though you are notionally not paying interest, the 'rent' is in fact interest, from the Bank's perspective. If this were not the case, Islamic mortgages would be immune to interest rate rises, and we would all be applying for them knowing we would never be required to increase our payments if the base rate increased - in effect a fixed rate for the lifetime of the mortgage.

temba

wow, that just seems like an interest paying mortgage, but re-worded.

knowledgeman

Its absolutly ridicolous

Allah clearly knows your conning him, interest renamed is still interest, he'll get you

Find a wheelie bin and move in

Mr_helpful

I charge interest to my tenants but I call it rent. this is where you really should look at faith and how you are being ripped off by its rules. especially as its only playing with the words of a different country

Mad101daN

I just did a little reading about this and this web site stated

The Quran forbids usury, not interest. Quite a few states in USA have laws against usury. Usury is defined as excessive interest. A Dictionary defines usury as "an excessive or inordinate premium for the use of money borrowed", "extortionate interest", or "the practice of taking exorbitant or excessive interest."

http://www.submission.org/islam/usury.html

EMcG

Sunni,

are Muslims allowed to earn interest on any savings?

Thanks

knowledgeman

EMcG wrote: »

Sunni,

are Muslims allowed to earn interest on any savings?

Thanks

No but surprisingly you'll find muslims arent so strict on that aspect:cool:

mroller

knowledgeman wrote: »

No but surprisingly you'll find muslims arent so strict on that aspect:cool:

muslims dont really agree on this. There has been some religious rulings (fatwa) in the past that authorize interest, but a lot says it's not authorized.

Besides this, a lot of muslims dont care really and are happy to receive interest.

black-saturn

Do you have to be a muslim to get one of these mortgages? It sounds absolutely ideal for me.