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Fatwa Answer

Question ID: 914 Category: Business Dealings
Bank Mortgage Loan

ssalam-o-Alekum Warahmatullahi Wabarakatu,

 
I am studying the Murabaha finance model for home purchase through Devon Bank. I understand that this is approved by the Sharia Board. The current model calculates the sell price of the house from Devon to the customer based on several factors including the time of repayment terms (15, 20, 30 yrs). Can you please explain what aspect of sharia allows the change of pricing using time as a factor?
 
Jazakallah,

الجواب وبالله التوفيق

To make the mode of payment, i.e. “payment in cash” or “paying installments”, as the basis of variation in the overall cost is permissible; as long as it was decided at the time of signing the contract what the difference in the cost would be if it is paid on cash at once or in installments. This process is considered permissible according to the Islamic Shari‘ah.

Similarly variation in the overall cost on the basis of number of years in which the installments will be paid is permissible; as long as it is decided at the time of singing the contract and there are no impermissible clauses in the contract such as “increasing the overall agreed upon cost for not making timely installments”.  

ویصح البیع بثمن مال موجل لاطلاق،  قولہ تعالی واحلّ اللہ البیع وحرّم الربوا   (القرآن، سورہ بقرہ

وکذا اذ قال بعتک ھذا العبد بالف درھم الی سنۃ او بالف وخمسۃ الی سنتین لان الثمن مجھول فاذا علم ورضی بہ جاز البیع لان المانع من الجواز ھوالجھالۃ عند العقد وقد زالت فی المجلس ولہ حکم حالۃ العقد فصار کانہ معلوم عندالعقد وان لم یعلم بہ حتی اذا افترقا لقدر الفساد    (کتاب النوازل ، ص 493، ج10

الا یری انہ یزاد فی الثمن لاجل الاجل    (حوالہ مذکورہ، ص 493، ج0 1

واللہ اعلم بالصواب