Explore the Islamic perspective on home ownership, diving into subjects such as mortgages, house loans, and halal alternatives. Discover Sharia-compliant ways of property acquisition.
Is it haram to buy a house with a mortgage?
Summary of answer. Mortgages are riba-based transactions and it is not permissible either in Muslim countries or non-Muslim countries to buy houses or stores on mortgages.
Is it allowed to buy a house on loan in Islam?
Some scholars say a traditional mortgage may be permitted under extenuating circumstances, where buying a home is considered a need and no alternative to a mortgage exists. However, Islamic finance alternatives to a mortgage now exist in the West.
Is mortgage haraam 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.
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.
Can a mortgage ever be halal?
Islam forbids interest-bearing loans, so Muslims may prefer to seek a halal alternative when purchasing a property. There are a range of Islamic mortgage alternatives available, allowing buyers to get on the property ladder while being sharia-compliant.
Which type of loan is halal?
An interest-free alternative to traditional loans These loans adhere to the principles of Sharia Law. Instead of interest, borrowers pay an origination fee set based on the amount borrowed. The fee is subtracted from the amount of the loan.