Wants to Purchase a House with a Riba-based Loan
Fatwa No: 418339

Question

I want to buy a house using home loan from State Bank of India. Currently I am paying more than 75000 INR as income tax yearly. Also I am living in a rented flat whose rent is 5000 per month. If I take home loan for 6 years, EMI will be around 35000 per month for 20 lakhs amount. I will be saving around 50000 per year from income tax and around 60000 from rent yearly. So to save 1.1 lakh per year (from income tax and rent). Can I take home loan? after 6 years i will be having a home as my own if i didn't take the loan means i have to pay the tax every year and the rent so please advice

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.

If you buy the house with a Riba (interest-based) loan, you might save the amount of money you mentioned, but you would incur the wrath of your Lord, your wealth would be devoid of all blessing, and the negative outcome of dealing with Riba and the evil consequences of sin would befall you as a result. This is because dealing with Riba is a grave major sin, and Allah, The Almighty, has declared war against those who engage in it. He Says (what means): {O you who have believed, fear Allah and give up what remains [due to you] of interest, if you should be believers. * And if you do not, then be informed of a war [against you] from Allah and His Messenger.} [Quran 2:278-279] Riba is one of the seven destructive sins, as stated in the Hadeeth reported on the authority of Abu Hurayrah  may  Allaah  be  pleased  with  him and cited by Al-Bukhaari and Muslim.

Whoever deals with Riba to increase his wealth will end up with less wealth. Ibn Mas‘ood  may  Allaah  be  pleased  with  him narrated that the Prophet,  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) said: “No matter how much the (profits from) Riba may be, it will ultimately result in decrease of wealth.” [Ahmad and Al-Haakim, who said: “Its chain of narration is authentic.”]

Accordingly, it is impermissible for a Muslim to take a Riba-based loan to purchase a house or the like, except in case of necessity. According to the Sharee‘ah, the extent of necessity – as stated by Az-Zarkashi  may  Allaah  have  mercy  upon  him is: “…when a person reaches a state where if he does not consume what is forbidden, he will die or will nearly die , such as the one who is in a state of necessity for food or clothes in such a way that if he stays hungry or naked, he will die or one of his body parts will be damaged…” [End of quote]

We believe that what you mentioned in the question does not constitute a legitimate necessity that makes it allowable to commit this grave Sharee‘ah violation. We advise you to fear Allah, The Almighty, as He Says (what means): {Whoever fears Allah – He will make for him a way out. And He will provide for him from where he does not expect.} [Quran 65: 2-3] We urge you to ask Allah to bless you with enough lawful sustenance that keeps you away from what is unlawful. You should also utilize all lawful means available, such as minimizing unnecessary expenses in order to save some money or looking for someone to lend you money as a Riba-free loan or engage in a lawful transaction with you like Istisnaa’ (Istisnaa’ is a sale’s contract in which the buyer contracts with the seller to manufacture, produce, construct, fabricate, assemble, or process any asset in accordance with given specifications, descriptions, identified quality and quantity, and within a specified period and at an agreed price which is paid immediately, after delivery of the product, or at a later time) and the like.

We ask Allah, The Exalted, to make matters easy for you.

Allah Knows best.

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