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Interest Bearing Loan for House Purchase

Answered as per Hanafi Fiqh by Albalagh.net

Interest Bearing Loan for House Purchase

By Mufti Ebrahim Desai


Q.) Can a person buy a home using a mortgage from a bank, here in America (or Australia etc.) i.e. take an interest bearing loan tied to the house being purchased, and payback interest on the principle as is done by the Western Banks? [S Murtaza]

A.) The transaction above being based on interest is impermissible and unlawful. However, Muslims should make efforts to adopt other permissible methods in accordance with the Shariah of Islam as opposed to this interest based transaction, for example, the bank could itself sell things pointed out in the question on installments. In other words, the bank should first buy from the original seller, add an appropriate profit then sell it onwards to the customer and then realize its total price in installments. (Contemporary Fataawa; Mufti Taqi Usmani). And Allah Ta’ala Knows Best

This answer was collected from Albalagh.net, which is an Islamic site with Q&A and articles authored by many world renowned scholars from the Muslim world. Many of Mufti Taqi Uthmani’s fatawa in English are found exclusively on this site.

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