Is Mortgage Halal due to Necessity?
Question:
Basically, I live in London and got married recently. I do not live with my wife at present as she is staying with my parents. I have been looking to try and purchase a flat or house but the prices are extortionate. House price inflation has grown so strongly in the last few years that even if I use the financing schemes now available through the likes of HSBC, UBK or UBL my monthly repayments would be prohibitively expensive. I registered us onto the Housing Register of my Local Authority [Council]. The waiting lists are so long that it is unlikely we will get a place through them. They do, however, provide help through Housing Associations to partake in ”Part Rent Part Buy” schemes.
In these schemes the individual purchases a share of the property and pays rent on the remaining un-owned equity. The rent on the un-owned equity is subsidised and very cheap. My problem is that the Sharia compliant schemes will not help me with the financing of the small share that I want to purchase. I only have a small amount of savings which are inadequate i.e. I do not have enough money to buy my share with cash.
My question is, given my situation would it be permissible for me to borrow money [on interest] to help finance the purchase of the 30-40% share? I ask this because I have been told that under ”Daroora” it is permissible to obtain third party car insurance. Is not the use of a car much more of a luxury than the obtaining of a flat/house to live in? Would the purchase of the bare minimum share using conventional interest based financing be considered a ”Daroora”?
Answer:
It would not be permissible to take out a loan on interest for the purchase of a house unless one is in a situation of dire and extreme need. The necessity (dharura) you have referred to is when one is in a situation of dire need and is exposed to perishing or sleeping on the streets.
Shaykh Muhammad Sa’id Ramadhan al-Bouti (Allah preserve him) of Damascus (Syria) states:
“The necessity which allows usurious loans is the same necessity which allows eating the meat of a dead animal, pig and the like, in which case the one necessitated is exposed to perish from hunger, nakedness or losing lodging. Such is the necessity, which makes prohibitions lawful.”
Thus, it will not be lawful to take loans on interest in normal situations. One should actively look towards other means of obtaining some help. If it is impossible to obtain an interest-free loan from family and friends, then one should reside in a rented house.
As far as third party car insurance is concerned, scholars permit it due to it being mandatory by law. In order for one to drive a car, it is necessary by law to have an insurance policy. One does not have to (by law) obtain a house on mortgage, thus the distinction between the two situations is apparent.
And Allah knows best
[Mufti] Muhammad ibn Adam
Darul Iftaa
Leicester , UK