Get a loan to buy a house: halal or haram ?
Becoming a real estate owner is a life project. This is not a decision to be taken lightly, it must be the subject of long reflection.
You must ask yourself many questions before embarking on this project: when to buy? What type of property to buy? or buy? and finally how to finance the purchase?
As a Muslim, before performing any action, the first question to ask is whether it is lawful (halal) or not (haram).
The Prophet (peace be upon him) said:
“Certainly the halal is clear and certainly the haram is clear and there are ambiguous things between the two that few people know. He who departs from ambiguous things has preserved his religion and his honour. As for the one who falls into ambiguous things, he falls into the haram like the shepherd who grazes his animals near a reserved enclosure and is therefore about to enter it. Certainly, each king has a reserved domain and certainly, the reserved domain of Allah is his prohibition.
Certainly, there is a piece of flesh in the body, if it is good then the whole body is good while if it is bad then the whole body is bad, certainly, it is of the heart “.
What is the difference between lawful (halal) and unlawful (haram)?
In the Muslim religion, there is a principle that states that what is lawful is what Allah and His Messenger have made as such and that what is unlawful is also what Allah and His Messenger have made as such, and that religion is what Allah and his messenger have instituted and that no one is allowed to deviate from the straight path that the Messenger has received the divine order to trace.
Allah (Exalted be He) says in Surat Al an’am (the cattle), verse 153:
“And here is My path in all its straightness, so follow it, and do not follow the paths that lead you away from His way. “This is what He commands you. Thus will you attain godliness.”
What must be legal in the purchase of real estate? Everything must be legal:
- The property purchased,
- Its use,
- The origin of the funds makes it possible to buy them.
This is the problem that the majority of Muslims who want to become owners face, how to finance the purchase without resorting to traditional usurious banking systems?
Indeed, usury (riba) is prohibited (haram) in Islam. There is no debate on this, there is consensus from our Prophet Muhammad (peace and blessings of Allah be upon him).
What is usury (riba) in the purchase of real estate?
This is the interest earned on loans. The Quranic verse which specifies the prohibition is the following, Surat Al Baqara (the cow), verse 278-279, Allah (exalted be He) says:
“Those who eat [practice] usurious interest only stand (on the Day of Judgment) as one stands whom the touch of Satan has upset.
This is because they say: “Trade is just like interest” Whereas God has made commerce lawful, and interest unlawful.
He, therefore, who ceases as soon as an exhortation from his Lord comes to him, can preserve what he has previously acquired; and his business depends on God. But whoever does it again… so here they are, the people of Fire! They will stay there forever.
God annihilates usurious interests and makes alms bear fruit. And God does not love the unbelieving sinner.
The ban on usury (riba) is an injunction from Allah and there is consensus among scholars that this verse forbids interest on loans. There are other forms of usury (riba) which have been explained by the Prophet Mohammad (peace be upon him), but here it is this classic form of the practice of interest that interests us.
Some will say that there have been scholarly fatwas allowing usury to be used to gain access to the property. This is a reference to a fatwa from an Islamic organization based in Dublin, the CEFR (European Council for Fatwa and Research), which authorized the use of bank usury by need. This fatwa engages only those who published it and these arguments did not convince anyone among the scholars of Islam.
Moreover, it is interesting to read the introduction of this fatwa:
[The council confirms the consensus of the community on the prohibition of usury “ar-riba” which is one of the seven major sins. Usury is indeed a major sin which provokes for those who are guilty of it, a war on the part of God and His Messenger. The Council thus confirms the decisions of the various committees of Islamic law equating bank interest with illicit usury.]
Even by authorizing usury (riba) for the purchase of real estate out of necessity, the introduction of this fatwa is recalled the haram and extremely serious nature of appealing to usury. So we authorize a haram and serious act that Allah (exalted be He) has forbidden.
The Muslim must above all seek to please his creator and obey his commandments because each law governing the life of the Muslim (being part of the Sharia) has been enacted by wisdom on the part of our lord.
How should the Muslim behave in the face of this prohibition?
Islamically, it is not obligatory to be a real estate owner, but the head of the family must offer a roof to his family. Islam guarantees anyone who has a deed of ownership the protection of his property.
Islam facilitates the accession to any good as long as the good is Islamically licit, that the resources which are used to buy the good are licit and finally that it does not keep you away from worship.
It is also important for Muslims not to depend on other people for work as well as for housing. Becoming an owner just like becoming an entrepreneur is encouraged by Islam because it embodies the creation of a strong and independent Muslim community. Is it a requirement? nope.
The acquisition of earthly properties also should not keep the Muslim away from the reminder that everything has an end and that it is useless to attach oneself to earthly good.
The Prophet (peace and blessings be upon him) said:
“Wealth does not consist in the abundance of goods, but true wealth is that of the soul”. (Reported by Al-Bukhari and Muslim).
The search for wealth and material goods is not an end in itself, an end, but rather a means of obtaining independence which itself will allow you to obtain financial independence, which will allow you in the event of an accident not worrying about paying rent, for example, or freeing up cash to finance children’s studies, giving alms, helping the poor.
The pursuit of wealth in general is not an end in itself in Islam, but a means to achieve other, much nobler goals.
Allah (Exalted be He) says in Surat Al Hadid, verse 7:
“Believe in Allah and His Messenger, and spend from what He has given you the lieutenancy of. Those of you who believe and spend [for the cause of Allah] will have a great reward. »
How should the Muslim behave in the face of this prohibition?
It is very important to know why you want to become a real estate owner. If the only reason is “not to throw money out the window”, namely to rent, know that this is Islamically and financially wrong, and even if it were, this idea of throwing money through the windows leads to anxiety-provoking behaviour and hasty purchases and above all to use any type of financing.
However, as we will see, buying real estate is a decision that must be well thought out and studied, which can take a few months or even a few years to materialize.
Finally, as we have seen, nothing prevents a Muslim from becoming an owner provided that the origin of the property is lawful, that the origin of the funds is lawful and that the property in question does not deter worship.
On the contrary, everything is done so that the Muslim frees himself from all forms of alienation and authority to avoid being at the mercy of the goodwill of any individual or donor, provided he has the capacity.
Buying vs renting?
Renting is often synonymous, in popular jargon, with throwing money out the window. This is Islamically wrong.
First, housing is a vital need, whether or not you own your home, it will not change the fact that you will have met this need.
Second, this is a case-by-case matter, and each case is unique. No generalizations should be made, especially in a financial system where access to illicit finance is so easy.
Renting has the advantage of being more flexible for someone who is not stable or who is looking for some freedom. As for the purchase, it represents a long-term investment, a certain security. But the major criterion remains the financial criterion, the profitability of the purchase operation compared to the rental.
Above is a financial comparison of buying and leasing. Even before going into the details, you can notice that renting is a much simpler operation than buying. Indeed, the purchase of a property is a sum of the purchase price, the acquisition costs made up of administrative fees and notary fees, annual property taxes, and annual maintenance charges which are often undervalued by buyers.
As you can see, several formulas exist to differentiate buying from renting, there are even calculators on the internet to compare renting to selling.
The problem for us Muslims is that all these calculations take into account the fact that the savings will be invested in remunerative accounts. However, these are illicit products that we cannot contract.
Alternatives to real estate investment
Not forcing yourself to become an owner if you cannot afford it is the first thing to do to avoid falling into the riba trap.
Moreover, for those who want to invest and who cannot afford to invest in real estate, other more profitable investments, with less capital, exist. All you have to do is find out and educate yourself about the possible investments.
Buying abroad, in Muslim countries, is also a very good alternative. It often costs less and allows you to have a foothold in a country that could become yours if you decide to do the hijra.
Conclusion
As you can see, in Islam it is not enough to take a calculator and make calculations of financial profitability.
The true profitability is that of your actions with Allah: are they accepted or not? The worship of Allah (Exalted be He) is the most important thing. It is a reminder to all those who would be ready to call on usurious credits. What is most important? To be an owner in this lower world which lasts only a period where to be an owner in paradise in the eternal beyond.
Muad ibn Anass reported that the Messenger of Allah said:
» He who reads the surah ten times, « Say: He is Allah Unique…. Qul Huwa Allahu ‘Ahad…” (SURAT AL IKHLAS) Allah will build him a Palace in Paradise “
According to Abou Umama Al Bahili, the Messenger of God said:
“I guarantee a house in the suburbs of Paradise to anyone who refrains from any controversy even when he was right.
I guarantee a home in the heart of Paradise to anyone who refrains from lying not even jokingly.
I guarantee a house in the highest places of Paradise to one who has been affable and of good character”.
(Reported by Abu Dawood and authenticated by Sheikh Al Albani)
The Prophet said:
“There is not a Muslim who prays for Allah, every day, twelve units of supererogatory prayers, apart from the obligatory prayers, without Allah building him a house in paradise. » [Reported by Muslim]
Allah (Exalted be He) says in Surat Al Ankabut, verse 64:
“This life here is not all fun and games. The Abode beyond is certainly real life. If they only knew!”
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