Buying a House with a Usurious Loan
Contemporary scholars have two different views on mortgage; the majority forbids it as it involves usury. The other says it is possible in case it is for personal residence and no other place is available to live.
Buying a House with a Usurious Loan
Borrowing from banks;
Buying a house with a mortgage;
Buying a house with usurious financing.
A Muslim living in a non-Muslim country may want to buy a flat or a house. In most non-Muslim countries such financing is provided by a usurious arrangement with a bank where the loan obtained is repaid with interest over a long period and the buyer owns the house after the loan is settled. This is what is known as buying with a mortgage and the question that arises is one of permissibility of using usurious loans.
Contemporary scholars have given two different opinions on this question.
The first view, which is the view of the majority of scholars, including the Islamic Fiqh Council and Shaikh Muhammad ibn Uthaimeen and other scholars, makes it forbidden for a Muslim to buy a house through usurious financing in any situation.
The texts that prohibit usury are all general in their import and they do not restrict the prohibition to a place or a period of time. They apply to all cases,
as in the Qur’anic verses:
‘God has made trade lawful and usury forbidden.’
‘Believers, fear God and give up what remains outstanding of usurious gains if you are true believers.’
The Prophet says:
‘Steer away from the seven cardinal sins ...’ and he includes usury as one of them.
(Related by al-Bukhari, hadith No. 5,431)
All these texts prohibit usury in general, without specifying any particular case.
Since usury among Muslims and all other sinful practices are forbidden in the land of Islam, they are also forbidden to Muslims living in other lands as well. An analogous case is that of a non-Muslim who is living in the land of Islam under a pledge of security. It is unanimously agreed that it is forbidden to conduct any kind of usurious transaction with such a person. The same applies to a Muslim who is in a country at war: he may not enter into usurious dealings with its people. Al-Shawkani said: ‘The provisions of Islamic law are binding on Muslims wherever they happen to be. Presence in the land of war does not abrogate Islamic law.’
The second view says that it is possible to use such usurious loans, and is expressed by the European Council for Fatwa and Research and the Assembly of Muslim Jurists of America, as well as other scholars.
Scholars subscribing to this view make it a condition that there is necessity or a great need to take out a usurious mortgage, as in the case that the property being bought is for personal residence, that the borrower has no other place to live and that he does not have enough money to buy except through this arrangement. However, these scholars urge Muslims living in the West to do their best to establish alternatives that are acceptable to Islam, and if a person can rent without causing himself much hardship then he should be content to do so.
It is an established rule, accepted by all schools of Islamic law and mentioned by al-Suyuti and Ibn Nujaym in Al-Ashbah wal-Naza’ir, that: ‘A public need is treated in the same way as a necessity.’ This rule means that a need is treated as a necessity in permitting what is normally forbidden. Such permission in a case of necessity is universally agreed, as stated in the Qur’anic verse:
‘He has clearly spelled out to you what He has forbidden you (to eat) unless you are driven to do so by sheer necessity.’
A need is defined as something that unless met a Muslim finds himself in difficulty, even though he will still live, while a necessity is something essential for life. A home is considered a basic need of man and when there are no legitimate alternatives for securing house ownership a Muslim will find himself in real difficulty. Therefore, this need takes the same ruling as a necessity until legitimate alternatives are in place.
These scholars also rely on the Hanafi school of Fiqh, in a rule stated by Abu Hanifah and his disciple Muhammad ibn al-Hasan, making it permissible for a Muslim to deal with non-Muslims in non-Muslim countries on the basis of invalid agreements.
The scholars who consider this arrangement unacceptable from the Islamic point of view respond to the advocates of the second view in the following terms: With reagards to the rule that need is treated like a necessity they say that Muslim minorities have not yet reached a stage where there is need or necessity. As such their need has not become so pressing that it may be treated as a necessity to allow them to use usurious transactions. Houses are available in most of these countries and a Muslim who is unable to buy a house has other alternatives, even if this means travelling to other countries to avoid committing what God has forbidden. Moreover, individual and exceptional cases do not necessitate a general ruling, which should be only issued in widespread situations.
As to the argument that Muslims can deal with non-Muslims to take out usurious loans in non-Muslim countries, scholars opposing the second view say that this is also not permissible. They say it is clear that resorting to usury, even with non-Muslims outside the Muslim world, is forbidden because the clear texts forbidding usury do not make such an exception.
Even if the Hanafi view on this point is correct, to use it as a basis for such an argument is wrong. According to the Hanafi view a Muslim may take usury in these cases, but in the mortgage case the Muslim user pays usury. As such the two cases are different.
Decisions by the Assembly of Muslim Jurists of America.
Decisions by the European Council for Fatwa and Research.
Decisions by the Islamic Fiqh Council.
Fatawa al-Aqaliyyat al-Muslimah by a number of scholars.
Abdullah Bin Bayyah, Sina[at al-Fatwa wa Fiqh al-Aqaliyyat.
Khalid Abd al-Qadir, Fiqh al-Aqaliyyat al-Muslimah.
Mustafa al-Zarqa, Fatawa.
- Muhammad ibn Ali al-Shawkani, Al-Sayl al-Jarrar al-Mutadaffiq 'ala Hada’iq al-Azhar.
- Decision 23, 11-3 of the Islamic Fiqh Council; Ibn Uthaimeen, Fatawa al-Aqaliyyat al-Muslimah, p. 83.
- Decision 2-5 of the Assembly of Muslim Jurists of America; Fiqh al-Aqaliyyat, pp. 154 and 168; M.A. al-Zarqa, Fatawa, pp. 621–6.