Home financing using Islamic or conventional mortgage

14 Sep 2021 Ref-No#: 3478

Assalamu ‘alaykum wa rahmatullaahi wa barakatuh dear Sheikh

We live in Vancouver, Canada. After lot of research, I have come to conclusion that there is no Shari’ah compliant home financing mortgage in Vancouver. I contacted Manzil and they said that it is based in Ontario and they are not yet financing in Vancouver. I have come to decision of selling my property in my home country and buying a home with complete payment (no mortgage) for my family living in Vancouver. However, I have to travel to sign the paperwork and sell the property. But, due to COVID, I’m unable to travel at this point of time. My kids are very young (all below 9 years of age) and so they are not yet vaccinated and hence many traveling restrictions and lack of flights to my home country. I’m hoping I can find a way to travel by next year in shaa Allaah as some flights might open up as suggested by the news channels. So my questions are:

1. The prices of the houses are going up. If I wait till next year, I might not be able to afford a house. Is it allowed to buy a house using conventional mortgage from the bank or Islamic bank which are not completely Shari’ah compliant? After I sell the property in my home country, I pay off the bank loan as quickly as possible. And I can give sadaqa for the interest paid at the bank.

2. I’m hoping that I can buy the house completely after selling the property in my home country by next year. If due to some unexpected things happen in the value of the property in my home country, and I do not get the amount I’m hoping to then is it allowed for me to rent part of the house in Vancouver and use that money to finish off making the bank payments? For example, if I buy the house for $100,000 with the conventional bank mortgage, and I have made 20% down payment. I would still owe $80,000. After selling the property in my home country next year, if I get $60,000 and pay the bank, I would still owe $20,000. Is it allowed for me to rent part of the house and use the rent money solely for the bank payments and not for my personal use?

I’m hoping that you can shed some light in this issue and I’m eagerly looking forward to hear from you.

BarakAllaahu feekum

Answer

Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,

It is not permissible to engage in an interest deal with the hope of repaying the amount back in charity.

The minute a person signs an interest deal, he is engaging in war with Allah, and becomes a target of the curse of the Prophet (sallAllahu ‘alayhi wa sallam).

Allah Ta’ala says

يأَيُّهَا الَّذِينَ ءَامَنُواْ اتَّقُواْ اللَّهَ وَذَرُواْ مَا بَقِىَ مِنَ الرِّبَواْ إِن كُنتُمْ مُّؤْمِنِينَ  فَإِن لَّمْ تَفْعَلُواْ فَأْذَنُواْ بِحَرْبٍ مّنَ اللَّهِ وَرَسُولِهِ (سورة البقرة: 278-279)

“O you who believe! Fear Allah and give up what remains (due to you) from interest, if you are (really) believers. And if you do not do it, then take a notice of war from Allah and His Messenger!” (Surah al-Baqarah, verses 278 – 279)

In a narration of Sahih Muslim. Jabir (may Allah be pleased with him) said:

عَنْ جَابِرٍ(رضي الله عنه)، قَالَ لَعَنَ رَسُولُ اللَّهِ صلى الله عليه وسلم آكِلَ الرِّبَا وَمُوكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ وَقَالَ هُمْ سَوَاءٌ  (أخرجه مسلم في صحيحه – 3 / 1219)

The Prophet (sallAllahu ‘alayhi wa sallam) cursed the: consumer of interest, the one who pays interest, the one who records the deal, and the two witnesses, and he said: “They are all equal.” (Sahih Muslim)

Besides these, there are numerous other narrations that clearly depict harmful it is to engage in interest bearing deals.

In order to purchase the property now, you may make a private deal with a few wealthy Muslims, using the same concepts of those financial institutes that offer Shari’ah-compliant financing. 

Should there be no one willing to enter with you in such a deal, then you should place your trust and conviction in Allah, believing in His words:

ومن يتّق الله يجعل لّه مخرجا، ويرزقه من حيث لايحتسب، ومن يّتوكّل علي الله فهو حسبه (سورة الطلاف: 3)

“Whosoever fears Allah (by observing His commandments), He will make a way out for him. And he will provide him from where he did not imagine. And whosoever puts his trust in Allah, then He will suffice him.” (at-Talaaq: verse 3)