Giving loan in return for share in profit is interest
Fatwa No: 362722

Question

I have spent 60 lac to buy a plot and build my house. Now I have no money to complete my house, so for its completion, I need another 15 lac. I asked my friend for a loan, and he told me that he will give me the loan on the condition that after selling the house, the profit will be split 50/50, meaning that I should give him half the profit. My question is whether this would constitute interest; I do not want to receive any loan that is interest-based. Please help me to understand this. Thank you.

Answer

All perfect praise be to Allah, the Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

The condition of the lender that you repay him the loan and give him half the profit from selling the house in addition is an invalid condition. It is not permissible for you to enter this interest-based contract. Borrowing money with interest is one of the gravest major sins. Please refer to fatwa 3522.

Allah knows best.

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