Answer
(Fatwa: 1754/1440=D/1429)
(1) If the bank itself purchases a house, includes the benefits (whether in the name of interest and its rate) and then sells it to you on condition of paying the total price on instalments, and you pay the monthly instalment, then it is lawful as per the Shariah. If you face difficulty living in a rented room, then you can purchase a house form a bank as per the above mentioned way, it is allowable. Thus, you will not be avoiding the sin of giving or taking the interest.
(2) In this way, one can also purchase a house and then sell it; this business is permissible for him.
(3) In the abovementioned dealing, there is no interest, it is the bank which sells you the house while taking the benefits, it is allowed to take and give benefits on commodities and property.
Yes, if the bank does not buy a house according to the abovementioned way, rather it gives you money to buy it, then whatever the additional amount out of the loan will be paid will surely be called interest which is haram to take and give. Thus, it will be unlawful to buy a house and then sell it to other while giving interest.
(4) Using interest amount in any way is like eating it.
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta,
Darul Uloom Deoband