0

Salam,

I currently live & work in USA. I am planning to buy an apartment & wanted to take loan from an Islamic organization which claims they use profit instead of fixed interest rate to give financial loans for housing purpose. Eg: They are charging (200k profit + Principal Amount) for a 180k loan which is spanned over 30 years. Total amount is paid in installments over a period of 30 years. I wanted to know if this is halal way of taking a finance ?

nabeel khan
  • 1

1 Answers1

1

It sounds to me like you are describing a murabahah contract. These are generally considered acceptable in Islam so long as the following conditions are met:

  • The final price is agreed upon by both parties at the time of transaction
  • The final price does not change after the agreement is made (i.e. it doesn't increase in case of late payments)
  • The bank first acquires the goods in full to sell back to you

From your description, this third point is the one I would worry about; if they're just giving you a loan of $180,000, and expecting you to pay back $380,000, that's a like-for-like transaction which is generally considered riba according to the well-known sayings of the Prophet e.g.:

Do not sell gold for gold, except like for like, and don't increase something of it upon something; and don't sell silver unless like for like, and don't increase some thing of it upon something, and do not sell for ready money something to be given later.
— Sahih Muslim 1584a

However, if the contract involves them agreeing to purchase the home with $180,000 such that the home is now in their name and they can sell it as they wish, and then you buying that home back from them for $380,000, that is considered a regular trade agreement in which profit is acceptable.

goldPseudo
  • 12,475
  • 16
  • 59
  • 131