Home loans un-Islamic, says Darul Uloom

In a fatwa (religious decree) issued recently, the well known seminary in Deoband has said that any loan that carried interest was not allowed in the islam.

The fatwa has been issued in response to a query from a person who had said that his salary was Rs 25,000 and he had been paying rent to the tune of Rs 5000 and sought to know if he could go for a housing loan.

“In the light of the holy Quran, it is haram (something that is illegal in the eyes of Islam) to take interest-based loan”, the “fatwa” issued by the seminary's “Darul Ifta” (department of fatwa) said.

“Hence you should not take interest based loan for home,” the fatwa went on to say.
The seminary, however, suggested a way out for the home loan seekers, which it said was in accordance with the islamic tenets though the banks might find it unacceptable.

“If the bank buys the house and includes the desired interest in the original amount and sells back to you and you re-pay the whole amount in installments, then it is allowable,” said the fatwa.