Clarifications On Mortgages Contracts
It still doesn’t answer my concerns. For the case of mortgage, there are essentially three parts of a contract happening: First, the sale agreement of house between seller and buyer at some fixed price. This is Halal and OK. Second, Mortgage agreement where the mortgage company or bank puts a lien ( or claim against the house as a collateral) which is Ok in terms of agreements and Islam. Third, the loan agreement between buyer and bank. Here this is problematic where we are essentially paying extra amount on the principal where the Bank has no ownership of the property. This according to definition becomes Sood. So out of three simultaneous transactions, 2 of them are Halal and 1 of it, i.e., loan agreement, is Haram. So it should make the whole deal Haram. Another thing about the price of the sale I need clarification is according to Fiqh and from the works of Islamic Ulemas and specifically Mufti Taqi Usmani, it is must to have the following: — fixed price of the final sale — for the duration of agreement and leasing, the ownership must remain with the seller or third party. Above two conditions does not seem to be addressed by the car financing or house mortgages. How do you justify these then? Need guidance here please with references if possible. Jazak Allah