Question
Is the following Murabahah Home Financing scheme permissible: "Our Murabah program is very simply an "instalment sale". You select the property and UIF, acting as an agent for University Bank, will purchase the property on your behalf from the seller. We then sell the property to you at an agreed upon marked-up price. At the closing, you acquire full title to the property and make your initial down payment, which may be as low as 5%. Your down payment toward the purchase price represents your initial investment in the property. Your monthly payment is divided into two portions – acquisition and profit. As you make your monthly payments, the acquisition balance is reduced, thereby increasing your investment in the home."
Answer
The so-called 'muraabahah' sale is baatil. It is a combined contract consisting of sale and leasing. It has also been given the s t u p i d, d e c e p t i v e n a m e, 'diminishing musharaka'. Many will not understand the drivel explanation proffered for this deceptive sale. In fact the penultimate statement in the explanation obscurum per obscurius. Unwary and ignorant people are misled with obscurity upon obscurity. This drivel concept is a concoction of baatil. We have written a detailed article explaining the invalidity of this type of hybrid sale -leasing / investment-acquisition incongruity.
According to the Shariah, a Muraabahah sale is a simple sale unencumbered with the capitalist stupidities which bedevil the 'diminishing musharaka' incongruity. In a Muraabah Sale, the amount of profit is known to the buyer. It is not an 'increasing investment/acquisition/profit' hybrid deal comprising of several deals in the same contract.
- Source
- themajlis.co.za
- Published in
- The Majlis Vol 22 No 12
- PDF page
- 2
Appears under A BAATIL - HYBRID DEAL (approximate).