Answered by Shaykh Muhammad ibn Adam al-Kawthari
I have a female relative who is receiving benefits from the government. She has been informed that she can acquire an interest only mortgage where the interest will be paid by the government. She will pay no interest , in effect all of the installment (because it is all interest) will be paid by the government. At the end of the mortgage she will own the house although she herself will not have paid any money. Is this lawful?
In the name of Allah, Most Compassionate, Most Merciful,
This type of arrangement where the government (or the benefits department of the government) pays off the house-mortgage on one’s behalf does not seem to be permissible, hence must be avoided.
The reason being is that the sister in question is entitled to receive benefit from the government. Now, this benefit is being used in order to pay off the mortgage on her behalf, hence when the mortgage is paid off, she becomes the owner of the property.
In other words, rather than the government giving her the benefit and then the sister using this benefit-money to pay off the house-mortgage, the government directly pays off her mortgage.
However, if the house or property is purchased by the government on mortgage, and then the property is given to her without any charge, then that would be allowed, for it is permitted to purchase or take as gift a house from someone who had previously purchased it on mortgage.
And Allah knows best
Muhammad ibn Adam al-kawthari
Darul Iftaa, Leicester, UK