Abdur Rahman ibn Yusuf Mangera – Simplified Zakat Guidance Mortgages and Long Term Loans

Bismillah R Rahman r Rahim, zakat on mortgages. Now the mortgage I'm

talking about here are

those which carry an interest which are obviously haram to begin

with. But let's just say some people are involved in that they

still want to pay zakat, which is a good thing. How would you pay

zakat because the idea is that let's just say you've borrowed

just for argument's sake, 100,000 pounds $100,000 to be paid over 10

years. So now you have money. And because you have to remember, this

is a loan that they're not going to rush you to pay off, if they

they've agreed with you, the bank has agreed, the lending

institution has agreed that you will repay this over the course of

10 years. In fact, some of them actually penalize you for paying

earlier. The reason is that they actually benefit from the long

term interest payments, because the longer you keep it, the more

interest you will pay, and initially always starts off with

more interest, a lot of interest, and then that gets decreased as

your capital decreases, right. So they don't want you to pay early.

What that does is that it gives a false sense of security to

individuals. And what they do is because they know how much they

have to pay that I have to maybe pay 200 pounds every week or 500

pounds every week, or whatever the case is, their salary is more than

that. So then they use the rest of their money, you know, for buying

good cars. And you know, mashallah they have a good lifestyle,

despite the fact that they're technically in debt. So a person

who was in debt maybe 100 200 300 years ago is very different to a

person who's in debt today, right? In those days, if you were in

debt, you could probably see that you are in debt, people would not

be you know, taking people would not be living a life lavish

lifestyle and taking huge amounts of debt that they were risking

that was just too dangerous. But because now you have, you know,

many laws that like safety net laws, like bankruptcy and all the

rest of it, people take a lot more risks. Right. And it's most of it

is haram. Right? Most of it's haram and we're gonna make that

very clear. But anyway, let's just say somebody has a loan, for

whatever reason, justify an unjustified, you know, whatever

the case is.

So now, let's just say that I've got saved up a person has saved up

10,000 pounds, and he's still got 60,000 pounds still to pay from

his original loan, he's paid off 40,000 of the 100,000 pound loan,

but he's got mashallah 10,000 bonds sitting, he doesn't want to

pay the bank because he'll be penalized or whatever, right? And

he's thinking, there's no need, I'll use this money, I'll invest

it, I'll do something else with it. So if he's got 10,000 pounds

as his own money, but then he owes 60,000. Can he did ducked 60 from

the 10, which means that he he'd be zero, he'd be minus 50. That

means he doesn't have to pay in his a cut. So that means what we

have, essentially, if we're going to go by that we have a lot of

people who seem to be living wealthy lifestyles, right?

indulgent lifestyles, comfortable lifestyles, driving some very good

things more than poor people, but they don't paint a cut. In fact,

to a certain degree, maybe you could even say, if they're using

every asset of theirs, Megan say that they could even take the cart

in some cases. Right? And that sounds very unfair. Right? So now

because this is a new situation where people have started taking

these long term loans, we do have a concept of long term loans in

Islam, like the loan of the dowry is considered like a long term

very weak kind of loan. Right. So now based on several examples like

that, the other might have said this, and this is, the alumni have

said that you should only deduct one years of payments that are

going to be due to you. So your next year of payments for the next

12 months or so, how much you need to pay off the bank. That's the

only part that you can actually deduct, right, you can't deduct

your entire loan, if it's a long term loan like that, which the

bank is not pushing you to pay early, because it's in their best

interest that you get paid late. So you should not detox 60,000 But

if your payments on this year is going to be 5000 or 10,000 That's

all you deduct. That's the only part you deduct from your assets.

And of course then if you have any assets left, then you pay zakat,

otherwise you don't.

My take on this thing is that if you have a loan and you're feeling

guilty and you want to pay it off, I had a friend like that he had

taken a bank loan, then he felt guilty one Ramadan and he just

wants you to pay it off. Right so every extra bit of income is

trying to pay it off, in fact to such a degree that he made a lot

of dua to Allah and then he basically asked his boss the

companies to work for a software company that can you actually

give me an advance payment for an entire year? You know, a

trustworthy I know this isn't gonna happen for everybody, but it

must surely worked for him. He basically asked that. He sent an

email, he made a lot of dollars, remember the Ramadan and he made a

lot of darling sent a message to his boss and he said, Can you give

me one year's advance payments, advance salary, which boss is

going to do that? And then he said I'll work for the next 12 months

for free. Because I really want to pay off my loan. You know, the

whole

Interest usury aspected gotten to,

and you won't believe it. The next day when he walked into work, he

wasn't expecting minus thing, the guy is gonna think I'm gonna he

knows I'm a, he was a bit of a bowl kind of guy anyway, he

thought he will just pass it off as a joke or whatever.

The boss was waiting for him at the door. And he said to him,

is a term Najim. He says, gone, look at the go today, is it the

human resources or the finance department, they've got something

for you. And I look at the deal that he got, he got there. And he

was thinking we don't he doesn't know when he got there.

Basically, they told him that if we give you your your yearly

payment in advance, you're going to have nothing for the next 12

months. So that's not going to be good, because then you're going to

be struggling, what we're going to do is we'll pay you your one year

in advance, then for the next 12 months, we'll give you 50% of

salary for the next year in advance. So literally by the

giving them what he's giving him one year of advance salary, before

he's even worked for the 12 months, then for every month of

those 12 months giving him 50% of next year's salary per month.

SubhanAllah. And this is something I'm telling you directly from the

person, right. So the idea is that, let's get back to our

discussion. If you are like him trying to pay your loan back every

extra bit of money, you're doing a you're not buying luxury, you're

not buying a new TV set, you're not buying a new sofa, a new car,

you're just running your old car, and you just want to get out of

this, then I think you can deduct the whole amount.

Right, then you can deduct the whole amount, because you are

really trying to pay it off, then it's no longer a long term loan

for you're willing to pay the fees, you know, the penalties,

early penalties, and you just want to get out because you just want

to get out of this curse. Right. But again, whenever you're going

to whenever you have an interest based loan, if if you are trying

to pay it off student loan, whatever you're trying to pay it

off actively every penny you have, then the only part you can

actually deduct is your original capital amount, not the interest

payment that they're going to want from you as well. So in the case

where you got 60,000 Left or 100,000 left, you can only have

your own capital that you borrowed, right original, that is

the only amount you will be able to deduct even though the bank

would expect more from you. Right on 100,000 loan, they're probably

you'll end up paying 140,000 You can't deduct, you can't do that

calculation that by the NLP. 140 So let me deduct 140. And it's

just let's just say you've got 200,000 sitting there, you've got

an inheritance, but you had a loan of 100,000. And you do the

calculation, you think, by the end of 10 years, I'm going to pay

140,000 So I should be able to deduce sorry, deduct 140 from my

200,000 assets, I should only be paying zakat on 60,000 of my

assets. No, you should only deduct your capital amount, because that

interest is haram that should not give you the luxury of deducting,

because that's you shouldn't even be paying that. So you should only

minus 1000 Or sorry. 100,000. From your 100 from your 200,000 Yeah,

so you should pay zakat on 200,000. That is only if you are

actively trying to pay back, which you were I mean, you've got the

money, why don't you pay it back? Right? So if you're in the long

term, the long term loan, right then in that case, don't deduct

your entire capital owed, but rather only one year's payments

that you're going to make, you're only allowed to deduct, it should

only deduct that much. So hopefully that clarifies the whole

case of long term loans that are based on these kinds of things. So

may Allah subhanaw taala, just like for our brother, he allowed

him to come out of this May Allah allow that but for that you need a

lot of doors and a will in sha Allah and Allah can help you as

well. Or if you read that when I need him to rely on me