Is it permissible to take out a mortgage to buy a house?
Conventional interest-based mortgages are impermissible (haram) in Islam due to riba (usury/interest). However, there are halal alternatives:
Why conventional mortgages are haram:
The Quran explicitly prohibits riba (2:275-279). A conventional mortgage involves paying interest on borrowed money, which is riba regardless of whether it is called "interest rate" or anything else.
Halal alternatives:
1. Murabaha (Cost-Plus Financing)
The Islamic bank buys the property outright and sells it to you at a higher agreed price, payable in instalments. No interest — it is a trade transaction.
2. Diminishing Musharakah
The bank and you co-own the property. You gradually buy out the bank's share over time, paying rent on the portion you don't own. Most common in UK, USA, Australia.
3. Ijara (Lease-to-Own)
The bank buys the property and leases it to you. At the end, ownership transfers.
If no Islamic mortgage is available:
Some scholars permit conventional mortgages in non-Muslim countries under the principle of darura (necessity) only if:
- No Islamic alternatives exist at all
- Renting is not a viable option
- The person will be severely harmed otherwise
However, this is a minority position. The majority of scholars maintain that renting is always available as an alternative to riba.
Recommendation: Seek an Islamic mortgage provider first (Gatehouse Bank UK, Guidance Residential USA, etc.). If unavailable in your country, consult a local mufti about your specific situation.