Islamic finance home mortgage

21 Jun 2019 Ref-No#: 1956

Asalam-o-Alykum, I live in Sydney Australia with my wife and two kids. I am interested to buy a house, but as we know Interests is haram in Islam. But I see many muslims buy properties through bank loan and mortgage which includes interests. Is it permissible? For me it’s only been 6 years now in Australia. I am trying to save to buy my first home, I don’t have any relatives here in Australia to give me loan and It’s impossible to save the whole amount and then buy in cash. Is there any islamic way to buy a house through any loan? Or should we just keep paying rent for the entire life? There are some Islamic finance in Australia such as MCCA Islamic Home Finance Australia Shariah Compliant Halal as they says. www.mcca.com.au
Is this halal way to buy through them?
Thanks

Answer

Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,

Riba (interest) has been strictly prohibited in the Quran. In fact, it is one of those few sine where Allah declares war with the one who indulges in it. In verses 278 and 279 of Surah al-Baqarah, Allah says,

   يَا أَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِنْ كُنتُمْ مُؤْمِنِينَ ۝ فَإِنْ لَمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِنَ اللَّهِ وَرَسُولِهِ 

“O you who believe, fear Allah and abandon all your remaining interest dealings if you truly believe in him. And if you do not do so, then prepare for war with Allah and His Messenger.”

Similarly, by engaging in interest dealings, a person becomes a target of the curse of the Prophet (sallallahu alayhi wa sallam)

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

“The Messenger of Allah (sallallahu alayhi wa sallam) cursed the consumer of Riba, its giver, its recorder and its two witnesses and he said they are (all) equal.” (Sahih Muslim, 3 / 1219)

Even though many people are unfortunately engaging in interest dealings, that does not make it permissible. In fact, the Prophet (sallallahu alayhi wa sallam) warned about such a time, as narrated in Sunan an-Nasai,

قال النسائي أخبرنا قتيبة قال حدثنا ابن أبي عدي عن داود بن أبي هند عن سعيد بن أبي خيرة عن الحسن عن أبي هريرة قال قال رسول الله صلى الله عليه وسلم قال يأتي على الناس زمان يأكلون الربا فمن لم يأكله أصابه من غباره (أخرجه النسائي في سننه – 7/ 279)

“A time will come upon people when most people will devour engage in interest. That person who does not involve himself will still be afflicted with the smoke of interest.” (Sunan an-Nasai, 7 / 279)

The solution is to live within our means. Allah has distributed sustenance according to His wisdom. If Allah has destined for you at present to only afford renting a place, then be content with that. If, in future, Allah destines for you to afford a small flat, then you can opt for that. If Allah opens the doors of wealth for you in future, then you are most welcome to purchase a nice property. 

It is best not to take a loan, since we do not know what the future holds. Nevertheless, if you still prefer taking a loan, then see what options you have for Islamic finance. Try to arrange a private deal with someone. You might find a creditor, even though you do not have any relatives there.

As for the link you sent, the link to their Shariah board leads to a blank page, so we could not get further information. Kindly send through to us their contracts in order for us to comment.