Fatwa ID: 04474
Answered by: Alimah Nasima Umm Hamza
Assalam o Alaykum
I am a resident of Birmingham and presently live in a house that I have mortgaged through NatWest. The present value of the house is £240,000 and I owe £107,000 to the bank. My bank has a 3% penalty charge if I pay back all the amount owed within the first five years of the mortgage. So far it has been only one year since I got the mortgage. I am presently in Jamaat for 40 days and have realized it is haram. I have to come to know about Islamic financing. Can you tell me which banks offer halal mortgages that are approved by your institution?
بِسْمِ اللهِ الرَّحْمنِ الرَّحِيْم
In the name of Allah, the Most Gracious, the Most Merciful
All Praise be to Allah (SWT) who guided you to understand that riba is completely forbidden in Islam.
Islamic mortgages are of two types. The first type is based on ijarah (leasing), where the buyer pays the rent while he lives in the house and makes payment in installments towards the full payment of the house until it has been purchased. The second type is called Murabaha. This is where the bank buys the house and then sells it to you for a profit, which you pay back in installments.
Mufti Taqi Usmani and some other contemporary scholars have permitted these types of Islamic home purchase plans.
The main bank currently offering Islamic mortgages in the UK is Al-Rayan Bank. There is also a smaller bank called Ahli United Bank. You can contact them for further details. Inshallah.
Allah (SWT) alone knows best.
Answered By Alimah Nasima Umm Hamza
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham