Mortgage Financing vs. Riba (3)
It’s my honor to have this conversation with a scholar like you who has good insight into religious affairs in a country where the majority observes a blind following. However, I want to assure you that, I cannot preach to condemn anything to others unless I am definite about its authenticity of being wrong. Once I was not fully sure whether milaad and Quar’an khuwani is a bid’ah. I had quit myself by not involving into that just because I was doubtful. Until later on research I found it to be bid’ah and then eventually started stopping others from that alhamdulillah.
Right now being a layman I am in a state of confusion and that’s why I depend upon the knowledgeable scholars like you to help me. I am sure you know that there are scholars and mufties in our country who even justify making prostrations to auliya’s tomb and calling upon them for help maz’Allah. And the ignorant do what they justify. So, being cautious from being caught up in a sin is always safe. And I am trying to be safe. Maybe I am a loser by not availing opportunity of mortgage by avoiding it, but that loss will be a worldly one. But the risk of the loss and torment of hereafter by being involved in riba is incomparable. I hope you understand how scary does the one with the limited knowledge feel with fears of being misguided. You are blessed that you have immense knowledge.
Anyway, I will again appreciate if you can tell me with your insight if this arrangement is riba or not? A rents out his house lets say for Rs. 5000 per month to B. The rent is to be paid on every 5th day of the month. If B is not able to pay the rent in time, A charges B Rs. 500 as penalty other than the actual rent for every month surpassed the due date. Will you not call that extra charge as riba? I have found this very same strategy used in mortgage/leasing deals.
I appreciate you bearing with me taking your precious time. Jazak’Allah kherun.
It’s always a pleasure communicating with an intelligent and God-fearing Muslim like you.
It is a good idea to be safe than sorry. If you are in doubt about whether a certain arrangement is acceptable or not, it is better not to get indulged in it. However, as you have rightly pointed out, it is important that we don’t burden people unnecessarily with views about which we are not sure ourselves. That’s why telling Muslims that acquiring homes through mortgage is haram is not a very good idea, especially when the claim cannot be considered completely authentic.
To me, the example you have mentioned is not describing a riba-based arrangement. The tenant has the option of vacating the house if he can’t pay. It’s his fault that he hasn’t honored his commitment. If a penalty is not imposed then many tenants would pay their rents late, which would be unfair on the owner. Moreover, the intention of the owner, unlike in the case of riba-based arrangement, is not to make money through penalties but to discipline the tenant into making timely payments. And Allah knows the best.