Conventional and Islamic finance of home purchase : providing Islamic house finance from interest loans received from conventional lenders

Fatawa Question

Salam. In Canada, there is no Islamic banking so far. There are some Islamic financial organizations, but the problem is that most of them are taking money from non-Islamic financial organizations. So people criticize Islamic way of financing by saying that although agreement between Islamic financial organization and lender is free from interest, the agreement between Islamic organization and conventional banks / financial organization is still based on Interest. The problem becomes more complicated as these Islamic organizations do not show their own agreements with lender. In such case what is responsibility of lender ? Can he proceed as at least his own agreement is interest free ? Second, there is very common statement going on in Canadian Muslims which is that any power of sale house or foreclosure house (which is owned by bank due to previous defaulters) is completely Halal as long as you are taking mortgage from the same bank who owns the bank. Please, clarify this point as how comes it become permissible in such scenario as mortgage is still conventional and interest based. Regards Shiraz.

Fatwa

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Publication Date

2009-06-07

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Housing
• Financing
• Purchasing
• Real property
• Commercial finance companies
• Usury
• Subprime mortgage

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-734902

• APA
• MLA
• AMA