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Christian buying a house on mortgage for you and selling it to you at the end of mortgage

Answered according to Hanafi Fiqh by Askimam.org

One of my colleague at work who is a Christian was constantly asking me why don’t I buy a house. I told him that I cannot do so because I cannot take mortgage as it involves interest and giving and taking interest is prohibited in Islam. Then he suggested to me that he can buy a house of my choice on mortgage in his name and let me live in that house as a tenant as long as I pay him all the expenses involved in buying the house as rent to him over the years and at the end of the mortgage he will sell the house to me in one dollar as I had paid all the expenses. All this would be written in a contract between as in the beginning. The advantage he highlighted in doing so is that he can write-off the interest on the mortgage and save on his taxes (i.e. pay less taxes) since he would own the house and pay mortgage and I can own the house eventually after buying from him in one dollar which would be a cash transaction. Is this scheme ok?

Answer

The Christian may buy the house on mortgage, and then sell it to you. The
two of you may mutually agree on any price and terms, provided these are all
clarified from outset.

He may also rent out the property to you, for any mutually agreed rental. In
the case of renting the house, one should bear in mind that he is not
obliged to sell it to you. He is at liberty, but not bound to sell it to you
after renting it out to you.

and Allah Ta’ala Knows Best

Mufti Ebrahim Desai
FATWA DEPT.

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This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

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