Friday, November 24, 2017 - 5 Rabi' al-Awwal 1439

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Is mortgage permissible in Islam?

Is taking a mortgage allowed in Islam? All mortgages are interest based (including the so called Islamic home purchase plans). This mortgage will be for an investment property in London, UK rather than as a first home.

I would be most grateful for a prompt response as I have a property I would like to purchase and don't want to lose it, if mortgage's are permitted.

Thank you

Answer

Mortgage is permissible in Islamic law because it is a form of murabaha.

• Murabaha: It is a sale in which it is permissible to stipulate an increase in price in exchange for deferring payment.

• Even though deferment is not considered real currency, in murabaha, there is an increase in price for deferment. The objective is to conclude the sale when there is an agreement between the two parties, there is no objection to the sale and people, buyers and sellers, are in need of it.

• This form of transaction is not considered riba [usury] according to the legal maxim:

• When the commodity comes between two transactions, there is no riba.

• You should not name such kinds of contracts as "loans" to avoid misconception and mixing it with the legal maxim that says, "each loan which brings benefit is deemed usury".

Allah Almighty knows best.
 

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