Tuesday, January 26, 2016

Frustrating Reponses When Talking of "Islamic" Mortgage

I will be blunt - whenever I see an ad for an "Islamic" mortgage, or a commercial on how to finance your house "the halal way", my scam alert meter activates. They go through all these fancy brochures explaining their methodology (why? how long does it take to explain how you are lending me money and making a profit?) and at the end of the day, it's interest - just called differently ("profit rate" - whose profit? How do I - the buyer, the borrower - have a "profit rate"?).

The fact that it's all a scam isn't even an outrageous idea; BBC had an article on 'how Islamic is Islamic banking'. The very fact that an Islamic bank can give you a bond (which by its definition is tied to an interest rate), give it an Arabic name (sukook) and thus make it halal tells you all you need to know that most Islamic 'halal' financing is a big scam.

But this post is not about that. This post is about how, when you tell some Muslims this, and why you will be forced to go to a conventional banking for a mortgage, they come up with all sort of statements that frankly says they haven't even spent a minute thinking about the issue.

Why do you need to buy? You can rent all your life?

OK, so unless you have done a comprehensive rent vs mortgage calculation, such as this one in the Financial Post or Toronto Star, you shouldn't be saying this. What it usually means is that you as a Muslim have decided not to borrow from the bank and pay interest due to your religious beliefs (fair point), but because of this you have also decided renting is far better than property ownership (debatable). Most articles that say renting could be better always say could be, or may be, or possibly. They also make a big assumption that you will invest the savings you get when you pay a lower amount of money in rent into the stock market, and that you will invest successfully, and you will have no landlord issues, and so on. Plus, rent is also going up every year.

You don't need to borrow the money, you can save and buy it outright.

Ya, right. Every year the prices continue to rise, and the rate far exceeds an average person's saving grace.

Muslims should reconsider living in the first world where prices are high and buy properties in Muslim countries where its cheaper.

When a scholar actually says this, you don't know whether to laugh or cry. First of all, the price of a house depends on where you live, but so does your earning! I can buy a huge plot of land with a house on it in Rangpur, Bangladesh, for less than my monthly salary in Canada, but what good does that do me? I live here, I need a house here. If I lived in Rangpur, I wouldn't be making the money I make here, so the scale of that house to my earning would be the same scale of a house here to my earning here. It's the same problem.

And anyone who thinks house prices are cheaper in Muslim areas clearly hasn't even done their research (Dubai? Islamabad? Dhaka? - just to give a few) It's this type of lazy speaking that bugs me. Do your research and bring some interesting points to the debate.

Quran says interest is haram. Period. Surah X, verse Y.

Usually accompanied by a Dr. Zakir Naik picture.

Look, no one is arguing that. Or debating that. But the Quran also says eating pork is haram, and we are well aware that Quranic verses do not apply when there's a necessity. If you are in a desert with nothing to eat for days and then you see a pig, you are allowed to kill it and eat.

But we are not in a desert. We can live without purchasing a house. It's not a necessity.

Well, some scholars say it is. Let's debate that, shall we. I am not saying they are right or wrong, but let's hear what they ...

Nowadays scholars will say anything for money. They will say anything is halal. It's contradictory to the Quran!

Exactly! So is "Islamic" financing, yet Muslims seemingly ignore those issues because it has an Islamic label to it. Again, I am not saying let's all go to CIBC and borrow some cash, I am saying let's talk about this intelligently.

There's nothing to discuss. Interest is haram. Period. You don't need to buy a house, you can rent it.

Aaaaaand we are back to square one.

Look, just pray 12 rakat daily and you will get a house in Jannah. Ha ha.

What. The. Fiqh.

That's like a person who cut his finger going to the doctor and the doctor is saying don't worry, in jannah you will be a young beautiful man with a houri. Solve the problem here and now.


Anonymous said...

"What. The. Fiqh." - the best line in this article. Truly a nice little summary of all the problem-"adding" arguments against taking interest in today's world.

Anonymous said...

not sure whether you read this.


mezba said...

@Anon (first), thanks for the comment. I should post a follow up piece on my own thoughts about interest.

@Anon (second), and what does that have to do with this article?

nadia said...

A good friend of mine works in an Islamic bank in the UAE and she says that while Islamic Financing in the true sharia sense is a very good concept, it is not being followed (it doesn't matter that they label interest as "profit").

Anonymous said...

Hmm Mezba, interesting to see you refer to the principle of necessity where one may be 'forced' to get a conventional mortagage in the West in order to buy a home.

Yet no such consideration for your Muslim sisters 'forced' to marry outside their faith in the West. According to you, these sisters are choosing their base desires over God's commands.

I think materialistic pursuits such as home ownership is more of a base desire than wanting companionship and children.

mezba said...


I spoke to someone in Bank of Sharjah Islamic Bank and while they try and keep most practices Islamic, there are few things they do that isn't. And they justify it because necessity.

Anon, because women not finding partners is not a necessity to marry non-Muslims. They have other options available to them.
1) Marry early
2) Marry Muslims from other cultures
3) Marry from "back home"
4) Enter a polygamous marriage