Explore the complexities of Islamic financing and understand if Muslims can have a mortgage in accordance with Islamic laws which prohibit interest-based loans.
Can Muslims have a mortgage?
By taking out a traditional mortgage, you’ll pay back the mortgage loan itself, but you’ll also pay interest to the lender. Because Islam only permits interest-free loans, this means Muslims cannot get a standard mortgage, and are unable to use government schemes like Help to Buy and Shared Ownership.
Is mortgage haram in Islam?
Islamic mortgages are not haram. Haram means forbidden by Islamic law. Halal means lawful or allowed in Islamic law. A traditional mortgage is haram, but Islamic home purchase plans are halal.
Is it halal to finance a house?
Islamic Home Financing vs. a Conventional Mortgage According to Islamic law, lending money to profit from any commercial or investment activity, including the financing of real estate, is not an acceptable method of commerce. To put it another way, riba (or interest) is not permissible.
How halal is a halal mortgage?
Avoidance of riba (usury): Halal mortgages are structured to avoid riba (usury), which is prohibited in Islam. This means interest payments do not increase over time.
What kind of loan is halal?
Halal is a new type of financing platform that offers zero interest loans to individuals and business entities. If you are a cooperative society, joining Halal gives you an added advantage as your members get get loans faster and more easily at zero interest rate.
Is it halal to take a loan?
According to Sharia laws, an increase of a debt owed or repayment of a loan is considered to be riba, or interest. This is strictly forbidden in Islam. Both the payment of interest and the receipt of interest payments are considered to be contrary to Islamic Sharia rules.