Purchasing an apartment through a bank
What is the ruling on purchasing an apartment through a bank? The buyer pays a down payment and the bank pays the rest of its price on his behalf. The buyer then pays the bank in installments with an agreed upon increase in price.
Cash and deferred payments are permissible in Islamic law. An increase in price in exchange for deferment is permissible according to the opinion of the majority of scholars because it is a form of 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.
In this scenario the bank is considered the mediator; it purchases an item or part of it and owns it either by right or by possession. The buyer then purchases the item from the bank in installments with an increase in price in exchange for deferring payment to a known maturity date.
Although, this transaction is sometimes called a loan, it is actually selling in installments. It is permissible due to the legal maxim: "If a commodity comes between two parties there is no riba involved".
Allah Almighty knows best.