Islamic Mortgage

Islamic MortgageCategory: FinanceIslamic Mortgage
Musherib Khan asked 2 years ago

Salam Sheikh, 

 
I am Musherib working as an expatriate in UAE. Hope everything will be fine and will go through this viral situation.
 
I need to clarify my doubts on Islamic mortgage in terms of Riba. Hope you would advise me to make right decision. 
So, the situation is I bought a home off plan 2 years ago and the handover is Q2of 2020 with 60% payment at the time of handover. At the time of buying, it was decided this will be Islamic mortgage and not thought much about it as it’s Shariah approved. But as the time of handover is approaching, I thought to know more about Islamic banking. 
But it’s not easy as I assumed, after doing some research there is some skepticism and have pointed out below: 
 
1.. Institution/ Bank should buy it physically before selling and it should not be only on paper. They claim this come under constructive agreement. Can this be considered. 
2. Customer should not sign any paper promising that he would buy the asset after they purchase, and he would not be liable for it. They won’t’ accept this. Can this be considered.
3. In case of Ijarah contact- Any liabilities emerging from the ownership shall be borne by the institution, but they won’t be. So, can this be neglected. 
4. In case of partnership contract- they should be partner in each thing like maintenance charges, tax, etc. but they will not be. So, what happen in this case as they don’t do.
5. Penalty fee not allowed. They say part of it go to charity. Is this acceptable? 
6. Customer should know about the repayment amount each month. Loan here has two elements, fixed & variable. Fixed portion will not change but variable portion of EMI is subject to EIBOR (Emirates Interbank Offered Rate) movement (upward or downward) as per frequency of 
review (usually 3rd month) agreed under the contract. So, will this not be uncertainty.
7. Institution includes life and property insurance in mortgage. They say it is Takaful. 
Can insurance be taken? 
8. What is the bank taking risk in this loan? 
9. What in case of job loss situation?
10. What in case of selling within mortgage years. I heard the loss in Shariah should be shared as per the partnership percentage. Will this be done?
11. Islamic banking are not 100% Shariah. 
 
I know it is a big list. But I need advice considering if any Riba or Gharar is involved in it or not. This will help to go ahead with property or not. 
Tried here, but it was one-line answer- it is Islamic, and loan can be taken. 
 
I know some questions get chosen and if this not selected, I would request to provide your known Ulema details over here so that I can contact them.
Please assist in it. Waiting for your feedback.