Explore the world of halal mortgages, how they meet Islamic law standards, their contrast to conventional mortgages, and whether they are an option for non-Muslims.
Are halal mortgages actually halal?
Are Islamic mortgages really halal? Islamic mortgages are considered halal mainly because they don’t involve the use of an interest-based loan. By the same token, traditional mortgages are widely believed to be haram, or forbidden, under Islamic law, because they necessitate the payment of interest on money.
What makes an Islamic mortgage halal?
With an Islamic halal mortgage, the bank buys the property for you and either charges you rent until you fully own it, or sells it back to you at a higher price. You will have a plan to pay it back in instalments, but there will be no interest involved.
Can a mortgage ever be halal?
Islam forbids interest-bearing loans, so Muslims may prefer to seek a halal alternative when purchasing a property. There are a range of Islamic mortgage alternatives available, allowing buyers to get on the property ladder while being sharia-compliant.
What is the difference between halal and haram mortgage?
The fundamental difference is that according to some scholars (not all), an Islamic mortgage complies with Sharia law, whilst a conventional one does not. In other words, an Islamic mortgage is halal and a conventional one is haram. Why? Interest.
Can non Muslims get a halal mortgage?
Although Islamic mortgages are primarily aimed at Muslims looking for a Sharia-compliant way to buy a home, they’re an option for non-Muslims too. Much of their appeal lies in the fact that Islamic banks must operate within certain ethical and social boundaries to abide by Sharia law.
Can Muslims pay interest on a mortgage?
Interest is deemed riba, and such practice is proscribed under Islamic law. It is haram, which means prohibited, as it is considered usurious and exploitative. By contrast, Islamic banking exists to further the socio-economic goals of an Islamic community.