Question Summary:
I want to purchase a home and would like to find out whether the Al-Baralah bank home finance is Shariah Compliant?

Question Detail:

I want to purchase a home and would like to find out whether the Al Baraka bank home finance is shariah compliant?

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh
There are various considerations when determining the Shariah Compliancy of a financial product. Most Islamic Financial Institution’s offer home finance products on the basis of Diminishing Musharakah/Murabaha (Cost plus finance). These concepts consist of various transactional legs/stages which must be separated and individualised. We have noticed that various Islamic Bank’s fail to adhere to the correct procedures and mechanisms in correctly implementing such concepts. Furthermore the terms and conditions of the underlying contracts should also be Shariah Compliant. The terms and conditions of the contract including the correct Shar’ee implementation are equally important in ensuring the product is 100% Shariah Compliant.
 
With regards to your specific question, we cannot comment on the Shariah Compliancy of Al-Barakah’s home finance product unless we are given the opportunity to review and analyse the latest terms and conditions of the actual contract.
 
And Allah Ta’āla Knows Best
Ismail Desai,
Darul Iftaa
 
Checked and Approved,
Mufti Ebrahim Desai.