Fatwa ID: 09323
Answered by Mufti Ateiq-ur Rehman
Question:
Can someone kindly explain in detail the scope of scholarly opinions regarding taking a conventional mortgage to buy one’s first house or flat in my case.
For full context, I live in a small one bedroom Council flat in east London. I have lived here since 2018. In 2025, it was quietly announced that the conditions of the government’s Right-to-buy scheme were going to be altered to substantively reduce the total discount a person could clam.
In my case, this would have been reduced from a discount of £136,000 to below £20,000. So, before the changes were implemented, I put in my application to the Council to secure the full discount in my offer; which I did.
I am now in the situation where I have to consider the Islamic legality of this situation in much more depth, and understand what conditions may be upon me if I go through with it.
I am mainly interested in three things, but welcome a response that covers all bases:
1) I have consulted two Fiqh teachers who have informed me that at the very least there are opinions on both sides i.e. some permit it and others prohibit it. I want to know however what are the reasons for this, what makes one opinion more or less convincing than others (in the Hanafi school)?
2) Following the reasoning of the opinions that permit it, are any limitation put on what one can do with the property whilst they are paying the mortgage? Can one rent the property to cover the mortgage payments and live with a family member. Effectively what I am asking is, can it be purchased as an investment that will be rented or sold in the near future?
3) This is perhaps the greatest concern that I have. Does taking the opinion that it is accepted fall into the category of Shubuhat (I am of the understanding that this is a minority opinion). Therefore, I am afraid that if this in fact the wrong decision that I may displease God and thereby cause the loss of blessing and closeness to God in my life.
It is perhaps useful to know that I come from a background in which owning a home is somewhat in conceivable due to the fact that relative to London, many of my family members would technically be consider impoverished. Therefore there is no opportunity for me to borrow from a family member.
Also to note that my intention for buying the property is not to live in it from hereon out, it is to use the profit I would attain from selling it later on to put down a deposit for a place that would could house my family (inshallah when we have children).
Also, please could you discuss briefly the legality of Islamic finance. I’ve heard from many that this is just as dubious a practice even if it is not called by the name “mortgage” or “interest.”
I appreciate you taking time to read this and respond. May Allah bless you greatly.
In the name of Allah, the Most Gracious, the Most Merciful
Answer:
Allah ﷻ says:
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَـٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَـٰٓئِكَ أَصْحَـٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَـٰلِدُونَ
“Those who consume riba will not stand except as one stands who is being beaten by Shaytan into insanity. That is because they say: ‘Trade is like riba,’ whereas Allah has permitted trade and forbidden riba. So whoever receives admonition from his Lord and stops, then for him is what has passed, and his matter is with Allah. But whoever returns to it, those are the people of the Fire; they will remain therein.” (Surah al-Baqarah 2:275)
This verse clearly distinguishes between lawful trade and unlawful interest. A conventional mortgage is a loan in which the borrower must repay more than the principal amount due to a stipulated increase. This increase is riba, and riba remains prohibited regardless of the purpose, even if it is to buy a home.
Therefore, taking out a conventional mortgage is not permissible.
However, there are Sharia-compliant home financing options available. In these arrangements, the transaction is structured differently. For example, the bank may purchase the property and then sell it to you at an agreed higher price payable in instalments, or the bank and customer may enter into a partnership where both jointly purchase the property and the customer gradually buys the bank’s share while paying rent for the portion owned by the bank.
In these models, the increase is not charged as interest on a loan, but as part of a lawful sale or partnership agreement. As long as the contracts are genuinely Sharia-compliant and free from riba in substance and form, such Islamic financing options should be chosen over conventional interest-based loans.
A Muslim should always strive to avoid riba and seek halal alternatives, trusting that Allah places barakah in what is lawful.
Only Allah ﷻ knows best.
Written by Mufti Ateiq-ur Rehman
Checked and approved by Mufti Mohammed Tosir Miah
Darul Ifta Birmingham
References:
[1]
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَـٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَـٰٓئِكَ أَصْحَـٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَـٰلِدُونَ
Surah al-Baqarah 2:275
[2]
(قَوْلُهُ وَلَوْ بِعَقْدٍ فَاسِدٍ) أَيْ وَلَوْ كَانَ الرِّبَا بِسَبَبِ عَقْدٍ فَاسِدٍ مِنْ غَيْرِ الْأَمْوَالِ الرِّبَوِيَّةِ كَبَيْعٍ بِشَرْطٍ كَمَا حَقَّقْنَاهُ فِيمَا مَرَّ، وَأَعَمُّ مِنْهُ عِبَارَةُ الْمُجْتَبَى الْمَذْكُورَةُ وَكَذَا قَوْلُ الزَّيْلَعِيِّ، وَكَذَا إذَا تَبَايَعَا فِيهَا بَيْعًا فَاسِدًا
كتاب حاشية ابن عابدين = رد المحتار ط الحلبي 5:186 المكتبة الشاملة
[3]
لَهُ مَالٌ فِيهِ شُبْهَةٌ إذَا تَصَدَّقَ بِهِ عَلَى أَبِيهِ يَكْفِيهِ ذَلِكَ وَلَا يُشْتَرَطُ التَّصَدُّقُ عَلَى الْأَجْنَبِيِّ وَكَذَا إذَا كَانَ ابْنُهُ مَعَهُ حِينَ كَانَ يَبِيعُ وَيَشْتَرِي وَفِيهَا بُيُوعٌ فَاسِدَةٌ فَوَهَبَ جَمِيعَ مَالِهِ لِابْنِهِ هَذَا خَرَجَ مِنْ الْعُهْدَةِ
كتاب الفتاوى العالمكيرية = الفتاوى الهندية 5:349 المكتبة الشاملة