HSBC 'halal mortgage' in UK?
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Question
I have a question regarding the new 'halal mortgage' scheme by the HSBC bank in UK. I've heard that many scholars have said its permissible because of Ijarah and Murabaha and previously Mufti Taqi Usmani have called this type of loan permissible, though I am not certain. I have also heard that Shaykh Yaqoobi has not approved it. Can you please elaborate on this. And also can you please explain Ijarah and Murabaha.Answer
In the name of Allah, Most Compassionate, Most Merciful,
Shaykh Mufti Taqi Usmani (Allah preserve him) along with two other scholars, Shaykh Nizam al-Ya’qubi (Bahrain) and Dr. al-Ghari (Saudi Arabia) have approved of the HSBC house financing schemes known as the Amanah House Financing. The house purchasing plan offered by HSBC is based on the Ijara plan. They don’t offer the Murabaha plan.
There are detailed explanations of both Murabaha and Ijara, and it is not possible to explain them in detail here, but in a nutshell, Murabaha is when the bank or financial institution purchases the house and then sells it to the client at a higher price on deferred payment. Ijarah is when the bank and the client both jointly purchase the house, and the client pays rent to the bank for its share and also payment in installments towards the purchase of the house. Finally, the client pays the entire price of the bank’s share, and the rent paid over this period would be the bank’s profit.
For more details, you may refer to Mufti Taqi Usmani’s book “An Introduction to Islamic Finance.” [available in the Files section at http://groups.yahoo.com/group/hanafi ]
And Allah knows best
Muhammad ibn Adam al-Kawthari
This answer was published by SunniPath and is preserved as written. Rulings can depend on circumstances; for your own situation, consult a qualified scholar.
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