Q: I have a home loan through and un-Islamic institution and my home loan is structured in such a way that allows me to deposit excess funds into the home loan account. This excess funds reduce the capital outstanding value upon which the ribaa (interest) is calculated. If I make use of the excess facility is the effective saving in terms of the ribaa charge looked at as ribaa earnings in my hands? The additional capital does not increase or decrease and can be removed at any time.
A: The way I understand it; by depositing extra money the capital value is reduced thereby reducing the Ribaa amount. This is preventing yourself from paying Ribaa. Paying Ribaa is also forbidden. You are reducing the Ribaa and not earning Ribaa.
Moulana Yusuf Laher