What is the Islamic law about the interest taken by a bank from a client who receives mortgage loan? - Questions Archive - IslamQuest is a reference for Islamic questions on the internet

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Summary of question

What is the Islamic law about the interest taken by a bank from a client who receives mortgage loan?

question

Is there any problem in mortgage with a high rate of interest? For example the principal amount is 18 thousand dollars which together with the interest becomes 30 thousand dollars that has to be repaid to the bank in different installments within ten year? (Ayatollah Bahjat is my Marja.)

Concise answer

We forwarded your question to the office of grand Ayatollah Bahjat (may his soul rest in peace) and the answer which came to us is as under:

If the mortgage facility is received in the form of a sale [contract], there is no problem in it.

[Note: In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments.]

For further information in this regard see the following indexes:

1. Index: Interest and Mortgage Loan and Car loan, question No.3364 (site: 3627)

2. Index: Using Loan for Purposes other than that which was first declared to the bank, question No. 2672 (site: 3044)

3. Index: Receiving Bank Loan or Bank Facilities, question 1225 (site: 1222).

Detailed Answer

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