Financing through FNB Islamic home loan
Question:-
Is it permissible to take a home loan from FNB Islamic home loan?
Answer:-
We are not too comfortable with their modus operandi after perusing some of their banking and finance contracts. Our suggestion is that you acquire an interest-free loan from some friends or family members, thereby avoiding any interaction with the banks.
If this is not an option and you intend purchasing a home, for example, then the bank should purchase the house directly from the seller. After purchasing the home and taking possession of the relevant documents (such as the title deeds) from the seller, the bank must then sell the house to you at a profit. For example, if they purchase the house for R1 million, then after taking possession of the house, they may sell the house to you for R1.5 million for example. You will then pay R1.5 million over a stipulated period of time in fixed monthly installments. Almost all banks require their clients to subscribe to an insurance policy when financing with them. Since insurance is Haraam, you should excuse yourself from subscribing to any insurance policy. Also, if you default in payment, the bank cannot penalize you for late payment as this is tantamount to interest, which is Haraam. If the banking institute adopts the above method of ‘financing’ and the rest of their contract is also Shariah compliant, then you are at liberty to purchase a home via them.