Two types of Islamic mortgages

Drawing by Jubril Idowu

Hello readers, I will be writing about two types of Islamic mortgages. Islamic mortgages are the best types of mortgages. This is because Allah (Glory be to Him, Lord of the Exalted Throne) has perfected Islam. Conventional mortgages make people pay interest. Allah hates interest. That means it will detrimental to you in this life and the Hereafter if you do not desist.

I am sure you have heard of people losing their conventional mortgages after several years of paying for the house. This is because the banks that gives conventional mortgages didnt buy the house but borrowed you money and when you are unable to pay they take the house from you. Think about recessions and how people lose houses during them.

Islamic banks provides ethical mortgages (Islamic mortgages). Islamic banks give out loans that are asset based or asset backed. For example, the Ijara Islamic mortgages buys the house and then leases it to you for a period. After that period, the house belongs to you. In a situation you are unable to keep up with the lease, the Islamic bank should exercise patience to see if you would be able to continue paying later. However, if you both agree to cancel the contract then you will own a part of the house you have paid for.

Mudaraba is another type of lslamic mortgage that buys the house and sells it to you at a higher price. You pay back in instalments to the Islamic bank over a period of time. The bank makes profit or loss. In a situation the person that the Islamic bank sells the house to is unable to pay the instalment. The bank and the person share whatever profit or loss they have. Allah knows best.

Everything should be done seeking the pleasure of Allah. Part of doing something seeking the pleasure of Allah is hoping for a reward from Him in this life and the Hereafter. Everything happens according to the will of Allah (you have freewill, and are responsible for your actions).

Alhamdulillah (Praise be to Allah). Thank you for reading this article. Please like this page on facebook. Cheers!

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