Answer
(Fatwa: 973/L=379/TL=1432)
As per the holy Quran it is haram to take interest based loan. The holy Prophet Muhammad (صلى الله عليه وسلم) cursed those who take interest, give interest, write it and bear witness to it. (Mishkah: 244)
Hence, one is given permission to take interest based loan to buy home. However, if you deal the bank in a way that first the bank buys the home and sells it to you after including the interest amount in the original price and fixes the price, and you pay it on instalments, then it shall be allowed.
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta,
Darul Uloom Deoband