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And Islam is not a burden. As a result, Islamic mortgages tend to be taken out only by those Muslims who regard conventional mortgages as being religiously prohibited. In fact, there is no involvement in either case, neither direct nor indirect. And I think everyone is gonna come back to the same place. It’s not only about what you’re paying, but it’s also about, in cases of the downside, the risk part of it. It leads to uncertainty (Gharar) in the transaction, which is totally prohibited in Shariah. • Even though deferment is not considered real currency, in murabaha, there is an increase in price for deferment. One of the things within Islam is that if someone is in trouble, you can’t add to their troubles by increasing the late fees, changing the interest, adding onto their principal balances, things along those lines. Or is it just, across-the-board, a different mindset. Our Islamic Financing Specialists will help you every step of the way and … Distributor: Saturna Brokerage Services, Member FINRA / SIPC. Transactions involved in Diminishing Musharaka. AMJAD QUADRI: Freddie and Fannie are not banking institutions so when you say they are not halal, I don’t know that that’s true. AMJAD QUADRI: Absolutely. The Muslim jurists allowing this arrangement have based their view on the principle that "the promise can be made enforceable at the time of need". MONEM SALAM: I think one of the last ones would be… there have been fatwas in the past that said we can buy conventional mortgages. This objection can be answered by saying that there is a big difference between putting a condition in the sale and making a separate promise without making it a condition. And I’m free to go to Hajj, I’m not in debt, I don’t feel like I’m in debt. AMJAD QUADRI: I think really, the nuts and bolts comes down to the contract itself. Our new mobile banking app is ready to download now . High-yield bonds may have low or no ratings, and may be considered "junk bonds." I’m Christopher Patton, here with me is Monem Salam. So how to get around that? For whatever reason, maybe Amjad you can talk about the history of it. These and other risks pertaining to specific funds are discussed in each fund's prospectus and summary prospectus. Share Flipboard Email Print CEphoto, Uwe Aranas/Wikimedia Commons/Photo by CEphoto, Uwe Aranas / CC-BY-SA-3.0 Islam. AMJAD QUADRI: I think when you know you’re going to be in a particular area for a significant amount of time and significant being probably you know, more than five years. He was actually born and raised in Chicago, lives there currently as well. Why is there so much skepticism in mortgages, Islamic mortgages? Islamic Mortgage UK is the leading resource for all Muslims looking for Islamic finance solutions. And if you have to sell it for less than what your house is actually worth, or less than what your house is actually worth or less than what you still owed, then they won’t come after you for a difference because if you are in a Musharakah contract, which means you’re a co-ownership contract, basically your co-owner decided to take the loss with you and it’s not gonna go on your credit that you have an outstanding balance or things along those lines. Islamic Mortgage Foundations and practices of a no-riba home mortgage. So then, he’s paying the other partner, the 50% partner, off, while he’s living in it, and paying them almost a rental amount while he does that. Conventional mortgages are very much that. Login Login Banking securely Register for new mobile banking app. The bank would allow you to use any funds you can prove are yours and acquired through legitimate means, so yes, you can use money in your Help to Save scheme towards halal, mortgage alternative Home Purchase Plan. And I realized that hey, let’s see if there’s another solution. This is permitted because Ijara can be effected for a future date. And what I think people sometimes don’t think about is if they reversed the position and they were the person that had a lot of money. Hopefully we’ll get rid of a lot of myths that a lot of people have about Islamic mortgages. What is an Islamic mortgage and how do they work? • Murabaha: It is a sale in which it is permissible to stipulate an increase in price in exchange for deferring payment. Alperton Lane, Greenford UB6 8AA That was the first one. The products are end-to-end Halal, which simply means permissible and in compliance with Islamic Shariah Law. I think there’s a lot of misperception, misunderstanding about exactly what Islamic mortgages are, how they work, and those type of things. This prohibits from investing in businesses that profit from things like alcohol, tobacco, drugs, weapons, gambling, and adult entertainment. He’s had, what, 12 years of experience specifically in the Islamic mortgages space. And this is a money-on-money transaction where there’s no effort put into it or there’s no assets that actually are backing the financing. I think now, a lot of the companies are not in all 50 states. The share of the financier is further divided into a number of units. Let’s say, they had, you know, multi-billions of dollars and they said, “I wanna help people buy homes. It will take effect irrespective of whether or not the promise is fulfilled. No pre-payment penalties and no profiting off of delayed or default payments. Stock prices fluctuate, sometimes quickly and significantly, for a broad range of reasons that may affect individual companies, industries, or sectors. Fax: 1 212 3194762 You feel like, you know, you have more saved up and you’re in a better place. So, if someone is in trouble and they have an Islamic contract, then the late fee is capped, and it’s capped at an administrative cost and the only reason it’s even there is just so that they can get the administrative cost back. CHRISTOPHER PATTON: And then, so the key shift that then happens in a Halal mortgage is a change in the risk-sharing and the kind of asset-based nature of it then? It is preferable that the purchase of different units by the client be effected on the basis of the market value of the house as prevalent on the date of purchase of that unit. Well, Islamic banks have come up with a product called the “Home Purchase Plan” or “HPP”. MONEM SALAM: That’s a beautiful story. CHRISTOPHER PATTON: I think it was exactly as he was describing when he says your first time through the process… it feels very demanding and very in-depth. And then, Mufti Taqi Usmani was one of the people that helped create the Guidance products, so I felt like his Urdu permission that he gave us no longer applied because now there’s a product from scratch. Their job is to help more Americans buy homes and the Muslim community being a part of the American community at large. Where, yeah, it does cater to a certain audience, but if you’re looking at it from a returns perspective or a risk perspective, anybody can use it. The reason for that is because they were new, they had more overhead. At the time of the purchase of each unit, sale must be effected by the exchange of an offer and acceptance at that particular date. And then the beauty of Islamic contracts comes into play… the beauty of it, and the actual crux of the matter comes into play with the contract itself and then the greater part is if you are ever in trouble. If you are interested in applying for a loan today, get in touch with us. In this manner it would appear that the buyer is indirectly involved in the payment of riba. There are some external similarities between Islamic home financing and a mortgage loan, but in reality they are based on completely different foundations. And this just decreases your overall blessings in your financing. A claim for actual damages suffered resulting from a default can consequently be made. A Islamic banks can participate in home financing on the basis of diminishing Musharakah. Then, Guidance came around almost like two years later. They are mandated government institutions that are supposed to help Americans buy homes. MONEM SALAM: So, you’ve mentioned a lot of things, and I know you’re in the industry so it comes rapid fire to you, but I just want to kinda try to sum up, if I can, what you actually said. If the condition is expressly mentioned at the time of sale, it means that the sale will be valid only il' the condition is fulfilled, meaning that if the condition is not fulfilled in future, the present sale will become void. MONEM SALAM: So, are you basically saying that if I wanted to start up a conventional mortgage-lending, I could easily just download a contract, take it to the state and start operating within a short amount of time? Are there trade-offs elsewhere that you find kinda make up for that? In either case, the sale of the house is valid, and the buyer may rest assured that s/he has done nothing wrong. AMJAD QUADRI: That’s exactly how it’s done. New York 10022 At the time, one of our good friends that we to a similar mosque that we did, that we grew up with, he was a CPA. We shouldn’t leave things in doubt.”. In his work entitled The Book of the Halal and the Haram, Imam Abu Hamid al Ghazali wrote: One who knows for a certainty that the wealth of the world has definitely had the Haram intermixed with it need not abstain from buying and selling, or from eating, because that would be an undue burden. AMJAD QUADRI: That is a very good way to look at it, yes. A halal mortgage doesn’t seem very halal and I’ve heard its quite controversial – but my research in that is lacking,” said 36-year-old, Shoohada Khanom. A. How to get a cheap Islamic mortgage/halal mortgage and save money. MONEM SALAM: That’s a good explanation. MONEM SALAM: Okay, the source of money is coming from Freddie and Fannie, which are not halal. All rights reserved, IIBI Institute of Islamic Banding and Insurance. A bond fund's price will typically follow the same pattern. Do you wanna just briefly talk about what are the most popular ones? Why are we worried about Islamic ones? 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