What is the Islamic ruling on buying a house through a mortgage?


A lady from Germany said to Hazrat Amirul Momineen, Khalifatul Masih Vaa that it is forbidden to give or take interest. She further said that in the Western world, when someone wants to buy a house, they have to pay interest on it. She asked if a Muslim was permitted to buy a home in these countries [on interest]. Huzoor-e-Anwar, in his letter dated 10 May 2022, provided the following answer to this question:

“Houses bought in the Western world through mortgages typically involve a loan acquired from a bank or financial institution. Until the loan is repaid, the property is in fact owned by the bank or financial institution. The bank or financial institution also charges an additional sum on this loan, which they attribute to the devaluation of money.

“Since not everyone in these countries can easily afford to buy a house for their residence, they are left with two options. They either have to live in a rented house their entire lives, in which case the lifelong paid rent provides them with  no benefit other than residing in the house because, despite paying a substantial amount in rent, the house never becomes their property. Alternatively, they are forced by circumstances to utilise the facility of a mortgage to buy a house for their residence. The mortgage repayments they have to make are almost the same as the rent they would be paying. However, the advantage of a mortgage is that after repaying the instalments, the house becomes their property.

“Therefore, buying a house through a mortgage is a matter of necessity and compulsion [iztirar], from which one may only benefit to the extent of buying a house for personal residence. However, using this method of a mortgage to continuously buy properties for business purposes is by no means correct, and the Jamaat does not encourage this at all; rather, it prohibits it.”

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