Question:
Is a deposit free mortgage offered by Skipton Building Society permissible? [Question Published as Received]
The Fatwa
In the Name of Allah, the Most Gracious, the Most Merciful
The Answer
The deposit free mortgage offered by Skipton Building Society is not Sharī’ah compliant, nor do they make any such claims. The deposit-free product offers 100% LTV and has a 5-year fixed rate of interest charged on the loan.
The Fiqh of The Answer
Ribā refers to the stipulated or customary excess that is unjustified and unwarranted in a contract. In the mortgage in question, the borrower does not make a down payment but borrows the entire sum from the financier and is charged interest. This interest is considered Ribā, and not a justified gain from a Sharī’ah perspective.
Lending is a charitable contract and a gratuitous performance in Sharī’ah. Lending cannot be monetised. Lending is a gesture of goodwill to support those in need. A loan contract is not the right vehicle to profit; a loan must be repaid at face value, and the risk of the funds are borne by the borrower. As such, the lender no longer bears the risk of the funds, nor is the return of his money conditional on the successful deployment and use of the funds. As such, he is not entitled to any gain over and above the capital he had provided to the borrower. Yes, he is entitled to immense reward for this virtuous act.
Any loan that draws benefit(s) for the lender beyond the capital is a Ribā contract. Imam al-Marghīnānī (d.593 AH) mentions that Ribā is unjustified consideration in transaction.
Imam Abu Bakr al-Jaṣṣāṣ al-Rāzī (d.370 AH) described the Ribā that was practiced in Jāhiliyyah as a loan entailing a specified repayment period, and an amount in excess of the capital is predetermined.
Below are modes commonly used within the Islamic Finance industry:
Ijārah Model
In Ijārah, or the leasing model, the bank acquires the property a customer wishes to buy and then leases it to the customer for a predetermined term at a specified monthly cost. Upon completion of the term, full ownership of the property is transferred to the customer by either a sale for a nominal fee or by gift.
Diminishing Mushārakah
Diminishing Mushārakah, or the partnership model, involves a co-ownership agreement between the customer and the bank where each party owns a separate share of the property. With each repayment, consisting of both capital and rent, the customer acquires more of the bank’s share. As a result, the rent decreases as the customer’s share increases, and eventually, the customer will gain ownership of the entire property.
Murābahah Model
In the Murābahah, or cost-plus profit model, the bank purchases the desired property on and then subsequently sells it to the customer at a markup. The customer then pays instalments over an agreed period. This model ensures a clear, fixed cost, avoiding ambiguity in the repayment structure, aligning with Sharī’ah principles of transparency and fairness.
While various financial institutions may claim to operate under the aforementioned Islamic financing models, it is crucial for individuals to exercise caution and conduct diligent research to verify whether institutions have received certification from reputable Sharī’ah boards. The application and implementation of these models are nuanced and highly technical, necessitating extensive vetting and consistent oversight to ensure strict adherence to Sharī’ah principles. A lack of thorough scrutiny and proper certification could result in engagements that are not truly in compliance with Sharī’ah principles, potentially leading to the inadvertent involvement in non- Sharī’ah compliant transactions. It is therefore paramount to seek and verify the approval of credible and authoritative Sharī’ah scholars or boards when considering such financial arrangements.
And Almighty Allah Alone Knows Best
Maulana Ammar Y Badat
Trainee Mufti
Reviewed and approved by
Mufti Faraz Adam
Darul Iftaa Muadh ibn Jabal
www.darulfiqh.com
DISCLAIMER:
The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any institutions to which he may be affiliated.
Arguments and ideas propounded in this answer are based on the juristic interpretations and reasoning of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another Mufti may reach different conclusions to the one expressed by the author. Whilst every effort has been taken to ensure total accuracy and soundness from a Shari’ah perspective, the author is open to any correction or juristic guidance. On the event of any juristic shortcomings, the author will retract any or all of the conclusions expressed within this answer.
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واما الرِّبَا فِي الدّين فَهُوَ على وَجْهَيْن احدها ان يَبِيع رجلا مَتَاعا بِالنَّسِيئَةِ فَلَمَّا حل الاجل طَالبه رب الدّين فَقَالَ الْمَدْيُون زِدْنِي فِي الاجل ازدك فِي الدَّرَاهِم فَفعل فان ذَلِك رَبًّا وَالثَّانِي ان يَقُول رب الدّين للمديون قبل مَحل الاجل اعطني مَالِي فاحط عَنْك بَعْضًا من ديني فَفعل فان ذَلِك رَبًّا للمديون وَلَا يحل لَهُ ذَلِك (النتف في الفتاوى)
لأن الربا هو الفضل المستحق لأحد المتعاقدين في المعاوضة الخالي عن عوض شرط فيه، ولا يعتبر الوصف لأنه لا يعد تفاوتا عرفا، أو لأن في اعتباره سد باب البياعات (الهداية للمرغيناني)
قال مُحَمَّدٌ رَحِمَهُ اللَّهُ تَعَالَى في كِتَابِ الصَّرْفِ إنَّ أَبَا حَنِيفَةَ رَحِمَهُ اللَّهُ تَعَالَى كان يَكْرَهُ كُلُّ قَرْضٍ جَرَّ مَنْفَعَةٍ قال الْكَرْخِيُّ هذا إذَا كانت الْمَنْفَعَةُ مَشْرُوطَةً في الْعَقْدِ بِأَنْ أَقْرَضَ غَلَّةً لِيَرُدَّ عليه صِحَاحًا أو ما أَشْبَهَ ذلك فَإِنْ لم تَكُنْ الْمَنْفَعَةُ مَشْرُوطَةً في الْعَقْدِ فَأَعْطَاهُ الْمُسْتَقْرِضُ أَجْوَدَ مِمَّا عليه فَلَا بَأْسَ بِهِ وَكَذَلِكَ إذَا أَقْرَضَ رَجُلًا دَرَاهِمَ أو دَنَانِيرَ لِيَشْتَرِيَ الْمُسْتَقْرِضُ من الْمُقْرِضِ مَتَاعًا بِثَمَنٍ غَالٍ فَهُوَ مَكْرُوهٌ وَإِنْ لم يَكُنْ شِرَاءُ الْمَتَاعِ مَشْرُوطًا في الْقَرْضِ وَلَكِنَّ الْمُسْتَقْرِضَ اشْتَرَى من الْمُقْرِضِ بَعْدَ الْقَرْضِ بِثَمَنٍ غَالٍ فَعَلَى قَوْلِ الْكَرْخِيِّ لَا بَأْسَ بِهِ وَذَكَرَ الْخَصَّافُ في كِتَابِهِ وقال ما أُحِبُّ له ذلك وَذَكَرَ شَمْسُ الْأَئِمَّةِ الْحَلْوَانِيُّ أَنَّهُ حَرَامٌ وَذَكَرَ مُحَمَّدٌ رَحِمَهُ اللَّهُ تَعَالَى في كِتَابِ الصَّرْفِ أَنَّ السَّلَفَ كَانُوا يَكْرَهُونَ ذلك (فتاوى الهندية)
وقال في الخانية وتكره السفتجة إلا أن يستقرض مطلقا ويوفي بعد ذلك في بلد أخرى من غير شرط ا هـ
مطلب كل قرض جر نفعا حرام قوله ( كل قرض جر نفعا حرام ) أي إذا كان مشروطا كما علم مما نقله عن البحر (حاشية ابن عابدين)
إن ربا الجاهلية إنما كان قرضا مؤجلاً بزيادة مشروطة ، فكانت الزيادة بدلا من الأجل (أحكام القرآن للجصاص)