Is applying for mortgage from the bank permissible?
I have been living in a western country for a number of years, married with kids. My query is related to the Islamic view on getting a mortgage from the bank to own a house in non-Islamic country. Unfortunately, I have been renting for years which practically ended up losing my money to promote the business of Kafeers (non-believers). In reality, I am paying off indirectly their loan. This is in addition to the fact that the rent always increases every year and my family can be evicted anytime, if the landlord wants back his house. This happened in the past which added pressure on us to relocate frequently.
Would it be permissible to apply for a loan, as long as the house is used solely to live in, and also increase payments to finish off the loan as soon as possible?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Shariah strictly prohibits and condemns all forms of Riba (interest). Interest is an inherent element of mortgage loans from non-Islamic banks, hence totally forbidden.
The Quran explicitly warns against the use of interest,
يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِنْ كُنْتُمْ مُؤْمِنِينَ. فَإِنْ لَمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِنَ اللَّهِ وَرَسُولِهِ.
“O those who believe, fear Allah and give up what still remains of the Riba(interest) if you are believers. But if you do not then listen to the declaration of war from Allah and His Messenger”. (AlBaqarah, verse 278,279)
يَا أَيُّهَا الَّذِينَ آمَنُوا لَا تَأْكُلُوا الرِّبَا أَضْعَافًا مُضَاعَفَةً وَاتَّقُوا اللَّهَ لَعَلَّكُمْ تُفْلِحُونَ.
“O you who believe! Eat not Ribâ (usury) doubled and multiplied, but fear Allâh that you may be successful.”(Al Imran verse 130).
Rasulullah Sallallahu Alayhi Wasallam) said:
عن جابر قال: لعن رسول الله صلى الله عليه وسلم آكل الربا وموكله وكاتبه وشاهديه(مسلم)
“Rasulullah (Sallallahu alayhi wasallam) cursed the one who consumes, deals, records and bears witness for interest based transactions”. (Muslim1598)
These Quarnic verses and Hadith are just the tip of the mountain when it comes to the admonitions against the use of Riba. Moreover, by you taking an interest based loan, you may encounter much more difficulty than you are currently experiencing due to renting. There is the possibility of one losing both money and house due to being unable to pay off the interest-inflated loan. In the wake of the recent credit crunch, mortgage rates have fluctuated drastically making it almost equally viable or more lucrative to rent a house than buying one. Renting is common for those who cannot afford purchasing a house.
We are not accountable for the money we pay to non-muslims. We as Muslims have to abide by the commands of Allah Ta’ala and have complete faith that in doing so comes Barakah and blessings, and violating the Shariah incurs the wrath of Allah Ta’ala.
“And whosoever fears Allah and keeps his duty to Him, He will make a way for him to get out (from every difficulty), and will provide him sustenance from where he never even imagined. And whosoever puts his trust in Allah, Allah is sufficient for him.”Qur’an 65:2-3
If you wish to purchase a house, we advise you to search for Shariah compliant Islamic Finance facility available in your country, or enter into a private deal with someone who would purchase the house and sell it to you with a profit. This is called Muraabaha which comes with certain procedures.
You may refer to Mufti Taqi’s book (An Introduction To Islamic Finance)
And Allah Ta’āla Knows Best
Mufti Arshad Ali