Salaamolaikum, I reside in a rented house and end up paying significant money as rent, I do not have an own house. It is difficult to save enough money and then buy a house by paying the whole amount at one go. My other assets are also not enough to buy a house even if I sell all of them. In this context am I allowed to avail a loan from a bank and buy or construct a house and then pay back the money in instalments, knowing that the bank is going to add interest to the principle when getting back the loan? Also this loan will help me in getting significant rebate on my taxable money(income tax).
Answer
(Fatwa: 1407/1130=L=1430)
The Quran and Haidth give sternest warning for interest based loan; therefore taking such loan without exigent conditions is haram. The lawful way is that the bank first purchases the house and sells it to you including the interest amount as price and you pay the total price in instalments.
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta,
Darul Uloom Deoband