[halfstreet]

Assalamu alaikum. As most of you know I'm new to practicing Islam & since finding out about ribaa are now trying to fix this great sin I am committing inshallah.
I have spoken to an Islamic bank in my area who I have to organize some documents to apply to have my house loan taken over.
Can anyone tell me how Islamic finance works and how it's halal?

[Arbinknit]

From what I understand of Islamic mortgages:

In a regular mortgage, the buyer makes a down payment toward the value of the house and then takes possession of the house, while the bank gives him a loan for the difference. So for example, a man buys a $100k house. He makes a 20% down payment. The bank loans him the remaining 80% ($80k). He then pays back the loan in installments plus interest.

In Islamic mortgage, the buyer does not take complete possession of the house. Instead, the bank is a co-owner. So assuming he makes a 20% down payment, he now owns 20% of the home, while the bank owns the other 80%. Each month, he makes a "rent" payment for the portion of the home he is occupying, but not in ownership of. So suppose it's a 2000 sq ft home. The man needs to pay rent on 1600 sq ft. I assume as his equity builds, his payments decrease, theoretically, although I'm not sure exactly how it works.

That's what I have understood of the matter. If I'm incorrect, hopefully someone can give the correct explanation.

[SoOW2LeA]

ASWW
What if someone dies?

[Grorointeri]

wswrwb -

brother, some thoughts as I have thought a lot about this type of situation:

these days better to rent than to buy, many house values are dropping like a stone, so just to be safe, always try do do that.

a lot of the "islamic mortgage" contracts have a lot of fine print, and who know what is in there...

even if there is some "islamic mortgage", this is not the sunnah type of transaction...

most people when they get out of the mortgage and rent, they say "I am so happy to be renting again"...you will appreciate the weight off of your back...

look up the meaning of the root words of the word "mortgage"; it comes from the latin for "death pledge".

the two scholars i asked about it basically said they don't know about it so they stay away from it....

hope this helps...