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House Mortgage And Riba
Salaam
I have watched all 3 episodes on Sood in “response to 23 questions” series. Though I have a question regarding house financing. I understand that we pay a principle amount and some interest on it which is the rent of using that house not sood as the house is owned by the bank (or bank has the higher percentage of ownership that reduces over time).
My question is, if there is some natural disaster and something bad happens to that house, banks dont take the responsibility of renovating or compensating for it even though it is owned by the bank. We would have to take the responsibility in such circumstances. Doesn’t it shape it into personal loan where sood implies? Shouldnt this expense be shared between both the parties as per the ownership would go? TIA
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4 Replies
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House Mortgage And Riba
updated 1 year, 7 months ago
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Replies
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In the rented house too the tenant is supposed to be responsible to the maintenance. To bear the loss by one or both parties is matter which can be done with sense of justice as you rightly pointes out but it doesn’t change the status of the contract. The contract can be made fairer.
Sood is only in loan. And house is not loan but a matter of sale and purchase in installments.
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Perfect. Thank you
I was also encountered by a question that by buying a house this way also increases the inflation. For example, I will never get the same house on the same price after 20 years. But this makes no sense as there are few factors like time value of money and market value to be considered.
And as you mentioned, it has nothing to do with loan but a sale purchase agreement so linking it with sood is just absurd.
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All mortgage contracts in my knowledge include a clause which makes the borrower responsible for carrying an insurance policy. If the borrower does not buy a policy or the policy lapses, the bank buys a policy on the borrower’s behalf and sends them a bill. In case of a disaster the insurance company is liable to make any repairs, not the bank or the borrower. This is a very just arrangement in my opinion. Also as Irfan sahab stated, it is not a valid basis to consider mortgage as riba.
Appreciation of house value can happen even without a mortgage and it again is not a valid basis to consider mortgage as riba.
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Thank you. Its very clear now 🙂
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