Fatwa: # 45413
Category: Business Matters
Country:
Date: 5th September 2020

Title

House financing through UIF - Could you help me evaluate this?

Question

Assalamu Alykum,

I am trying to buy a house via UIF (https://www.myuif.com/fatawa/) via their diminishing musharakh program. I have researched a lot and I still am not fully convinced if they are fully "halal". I am in no state to judge their programs, but as I speak to them here is what I learn:

1. The ownership is on me from the first day. This will force me to pay any insurance, taxes etc. 

2. The rent (aka profit) is fixed for fixed amount of time that I choose (30 years, 15 years etc.). Meaning, the house isn't going to be re-appraised during the contract period. 

3. The buyout and rent (aka profit) portion diminish in an amortized manner as the payments succeed in future. 

4. UIF buys the house and then sell the contract to Freddie Mac (without any interest). 

Could you help me evaluate this?

 

Jazakallahu Khairan for all the help. 

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

In principle, the Shariah compliancy of a finance scheme is dependent on three factors:

1)    The concept

2)    The contract

3)    The implementation

 

1) The concept itself must be accepted in Shariah.

2) The contract must reflect the actual reality of the concept.

3) The implementation of the product claimed as Shariah Compliant according to the terms and conditions reflected in the contract. It is one thing to have a Shariah Compliant contract and it is another to enact the product according to the contract. If the product is not enacted according to the terms and conditions of the contract, the transaction cannot be claimed as Shariah Compliant.

We are unable to comment on the UIF Diminishing programme (https://www.myuif.com/fatawa/). In order for us to advise further, we require the contract/terms and conditions of the contract.

You may respond to admin@daruliftaa.net Ref: Mahmood Suliman.

And Allah Ta’āla Knows Best

Mahmood Suliman

Student Darul Iftaa
Gaborone, Botswana

Checked and Approved by,
Mufti Ebrahim Desai.

 

DISCLAIMER - AskImam.org questions
AskImam.org answers issues pertaining to Shar'ah. Thereafter, these questions and answers are placed for public view on www.askimam.org for educational purposes. However, many of these answers are unique to a particular scenario and cannot be taken as a basis to establish a ruling in another situation or another environment. Askimam.org bears no responsibility with regards to these questions being used out of their intended context.
  • The Shar's ruling herein given is based specifically on the question posed and should be read in conjunction with the question.
  • AskImam.org bears no responsibility to any party who may or may not act on this answer and is being hereby exempted from loss or damage howsoever caused.
  • This answer may not be used as evidence in any Court of Law without prior written consent of AskImam.org.
  • Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.
The Messenger of Allah said, "When Allah wishes good for someone, He bestows upon him the understanding of Deen."
[Al-Bukhari and Muslim]