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HomeExpertsFrom an Islamic perspective: Mortgage.

From an Islamic perspective: Mortgage.

If we set aside beliefs and worship, the fundamental principles of religions regarding transactions are aimed at regulating individuals’ financial and family relationships. A significant portion of the commandments in the Quran consists of rulings related to these two areas. Usury is the primary prohibition in Islamic economics as well as adultery. Scholars have stated that usury and adultery are prohibited in all divine religions. This is because the violation of both prohibitions leads to irreparable harm for individuals and society as a whole.

Interest began to be debated during the time of the Companions and became a subject of intense discussions during the era of mujtahid imams. In the subsequent centuries, it remained an important topic that constantly occupied the agenda of scholars. However, discussions about interest have never been as intensified as they are in the present day. This is because interest has never gained the same level of prevalence as it has today. Capital forms the main backbone of the modern capitalist system. Interest-bearing loans ensure the concentration and fluidity of capital.

The reason for such extensive discussion and debate on interest is not only its institutionalization through banks and its permeation into every aspect of life. There are other reasons as well. In today’s world, economic issues seem to overshadow all religious, moral, familial, cultural, and artistic problems. The economy constitutes the top priority for many. Some struggle to survive in a time when livelihood has become extremely challenging, while others fight for earning more, gaining higher profits, and achieving greater growth. Unfortunately, when profit and gain come into play, all values can be trampled upon, and the prohibition of interest is also affected by this.

Here we will discuss mortgage, which has been a topic of discussion and curiosity for a long time, without conducting a detailed analysis of interest. Due to the variety of opinions and different aspects surrounding the subject, we would like to examine the issue in some detail.

Understanding both the mortgage issue and other matters related to loans depends on a good understanding of the definition and nature of interest. Therefore, we will first address the concept of interest from various dimensions. Then we will evaluate whether bank interest falls within the prohibited realm of usury (riba) according to the Quran. After that, we will examine the ruling on mortgage from three different perspectives: the nature of the mortgage contract, the rulings of dar al-harb (non-Muslim lands), and necessity.

Our aim here is not to provide a quick verdict on the matter, but rather to shed light on the evidence and background of the given verdicts, assisting individuals in understanding the subject correctly and making informed decisions. Additionally, we will present our own assessments regarding the opinions put forth on the subject.

Interest in the Qur’an

Interest (faiz) is one of the prohibitions explicitly mentioned and strongly condemned in the gradual prohibitions of the Qur’an. In the first revealed verse concerning interest, it is stated that the money invested in interest, with the aim of increasing and multiplying it, will not increase in the sight of Allah, while the charity (zakat) given with the intention of seeking Allah’s pleasure will increase and multiply. (Surah Ar-Rum, 30:39) Although there is no explicit prohibition regarding interest in this verse, it is evident that a negative stance is presented.

The ruling of the verse can be understood from both worldly and hereafter perspectives. From a worldly perspective, it emphasizes that the apparent increase in wealth through interest will lead to the disappearance of its blessings, while the giving of zakat, although appearing to decrease wealth outwardly, will actually bring about blessings. From a hereafter perspective, it is understood that the money given to others in the form of interest income will not benefit a person in the afterlife, whereas the rewards of giving zakat will be multiplied and returned to the individual.

In the second revealed verse concerning interest, the Jews are rebuked for consuming interest, despite it being forbidden for them, and it is mentioned that as a consequence of their sins, certain lawful foods were made unlawful for them. (Surah An-Nisa, 4:161) Although this verse is not directly addressed to Muslims, it demonstrates that interest is a sin that incurs divine wrath.

In the third stage, the following verse was revealed regarding interest, marking the initial prohibition: “O you who believe! Do not consume interest, multiplied and multiplied. And fear Allah that you may be successful.” (Surah Al-Imran, 3:130) In the pre-Islamic society, if debts were not paid by their due date, an additional amount of interest was added, and the maturity was extended. In many cases, the accrued interest would surpass the principal amount. Some scholars argue that this verse specifically prohibits the excessive usury and compound interest that were widespread during the pre-Islamic era. However, the majority view is that what is prohibited here is interest in its absolute sense. The condition of being multiplied is not a disputed condition but rather an unanimously agreed-upon condition. The phrase “edâfen müdâafe” meaning “multiplicative increase” does not limit the ruling; it reflects the prevailing situation of that time. It has also been suggested that this phrase signifies the unchanging characteristic of interest.

Lastly, in Surah Al-Baqarah, verses 275, 276, 278, and 279, which contain severe warnings and detailed explanations about interest, interest is unequivocally prohibited without any room for doubt. These verses state that Allah has made lawful trade and forbidden interest, that those who consume interest will stand up on the Day of Resurrection as if they have been touched by Satan, and that Allah will destroy interest. The believers are warned to avoid it, and if they persist in consuming interest, they are informed that they will be at war with Allah and His Messenger (peace be upon him). Those who repent from engaging in usury are told that only their principal will be theirs, and only in that case will they be able to avoid injustice and being subjected to it.

In the Qur’an, there is no other prohibition that contains such severe threats as the prohibition of interest. Imam Malik, after studying the Book of Allah and the Sunnah of His Messenger, stated that he did not see anything more evil than usury (interest). (Kurtubi, Al-Jami’ li Ahkam al-Qur’an, 4/405)

In the Sunnah (traditions and practices of the Prophet), the prohibition of interest mentioned in the Qur’an is emphasized and elaborated upon through the verbal and practical teachings of the Prophet Muhammad (peace be upon him). Interest was a well-known and widely practiced transaction among the pre-Islamic Arabs. Therefore, they did not have difficulty understanding and implementing the prohibition of usury as stated in the Qur’an. Prophet Muhammad (peace be upon him) also declared in his Farewell Sermon that he had abolished all outstanding and unpaid interest from the pre-Islamic era, and that lenders would only be entitled to their principal amounts. (Sunan ad-Darimi, Manasik 34)

In his hadiths (sayings and actions), Prophet Muhammad (peace be upon him) not only mentioned the prohibition of explicit interest in debt transactions but also stated that certain types of transactions, whether conducted on a cash or credit basis, could fall under the category of usury. In particular, a well-known authentic hadith known as the “esnaf-ı sitte” (six categories of goods) hadith mentions that gold should be exchanged for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, and salt for salt, all in equal amounts and on a cash basis. The hadith concludes with the statement, “If the categories of goods are different, then you may sell them as you wish, as long as it is on a cash basis.” (Sahih Muslim, Musaqat 81)

Jurists have identified the common characteristic among the mentioned goods and concluded that the same characteristic would apply to other goods with similar attributes, indicating that interest would also be present in those goods. Therefore, the mention of these six specific types of goods in the hadith is not meant to restrict interest solely to those goods but serves as an example. Consequently, goods with the same qualities as those mentioned in the hadith would be subject to the same ruling. However, due to the complexity and extensive discussions on this topic in the jurisprudential books, we won’t delve into its details here, as it is not the main focus of our discussion.

Indeed, there are hadiths that emphasize the severity of interest as a major sin in the sight of Allah and call upon Muslims to abstain from it. For instance, in one hadith, interest is mentioned as one of the seven major sins that lead a person to destruction. (Sahih Bukhari, Wasiyyah 23; Sahih Muslim, Iman 145) Another hadith states that those who consume interest, provide it, witness its transaction, or record it are cursed. (Sahih Muslim, Musaqat 105-106) Additionally, the following hadith serves as an explanation of the statement in the Quran that Allah will destroy interest: “Whoever increases his wealth through interest, his ultimate fate is nothing but a decrease in wealth leading to poverty.” (Sunan Ibn Majah, Trade 58)

In addition to these, there are hadiths that discuss the manner of repaying debts, whether it is permissible for a debtor to give gifts to the creditor, whether a discount can be given for a debt paid before its due date, the widespread occurrence of interest in the later times, and the ruling on interest in the abode of war (dar al-harb). These hadiths provide guidance and clarification on various aspects related to interest and debt.

Interest (Faiz) is a concept that is difficult to understand in detail and depth. Especially when it comes to the types of transactional interest (such as riba al-nasi’ah and riba al-fadl) mentioned in hadiths, intricate interpretations have been made. (Since transactional interest is not directly related to our topic, we will not delve into it.) However, even though not everyone can grasp all the intricacies of the subject, with some focus, one can understand the basic logic and philosophy behind interest and determine which transactions fall under the category of interest. Particularly in debt transactions, one can comprehend what constitutes interest and what does not. We will try to address the subject in a simplified manner.

In its literal sense, riba means increase, growth, augmentation, or inflation. The technical definition is closely related to its literal meaning. In Islamic jurisprudence, riba is defined as any surplus that remains in a bilateral contract (a contract in which both parties provide consideration/payment). This surplus can be either real or virtual, involving monetary or non-monetary benefits. It refers to any excess or additional benefit that remains unreciprocated in a contract.

To further simplify, we can define interest as an excess or surplus that is imposed as a condition on one party in a borrowing situation without any corresponding compensation. For example, if someone borrows a thousand dollars and is required to repay it as one thousand and one hundred dollars after one year, this is interest. (Compensation for the loss of value due to inflation is a separate matter.) In the agreement made, there is no equivalent value for this additional one hundred lira. Similarly, if someone lends money to another person with the condition of living in their house for free, it is also an interest-based transaction. This is because there is an unreciprocated surplus, such as the benefit of using the house, resulting from the act of lending.

Islamic law places great importance on maintaining balance and justice in contractual agreements. For example, conditions that provide additional benefits to one party during the agreement are considered invalid. This includes situations where a seller conditions the sale of a house on the buyer’s continued residence in the property for a period of time or a tailor conditions the sale of fabric on the buyer sewing it themselves. Similarly, combining two different contracts within the same agreement is prohibited, such as saying, “I will sell you my car if you rent your house to me.” Giving gifts by the debtor to the creditor is subject to strict conditions. Cash transactions are encouraged, and restrictions are placed on deferred payments. In transactions where one of the considerations is not money, restrictions are imposed on the exchange of two goods that fall under the category of interest in a deferred manner. The purpose of all these measures is to avoid interest or any suspicion of interest and to prevent unjust gains. While mutual consent is important in transactions, it does not make transactions that are prohibited as per Islamic law permissible.

During the pre-islamic period and in today’s prevalent form, interest (usury) is the rental of money. It is making money from money. It is the cost of using money for a temporary period. It transforms money, which is a medium of exchange, into a commodity that is bought and sold. It is an unjust gain that lacks labor and risk.

Why is interest prohibited?

Like all the rulings of the Qur’an and Sunnah, the true cause (real reason) for the prohibition of interest is the decisive and binding divine commandments, that is, the divine order. However, scholars generally state that most of the rulings regarding transactions are based on rationality, meaning that the intellect can comprehend the causes, reasons, justifications, and wisdom behind the obligation or prohibition of these rulings. In this sense, much can be said about interest. Especially at the end of the verses in Surah Al-Baqarah regarding interest, it is stated, “But if you repent, you may have your principal – [thus] you do no wrong, nor are you wronged.” (2:279) From the clear expression of the verse, it can be understood that the primary reason for the prohibition of interest is to protect the parties involved and third parties from injustice, unjust gain, and harm.

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Professor Yuksel Cayiroglu is a scholar focusing on Islamic Law and Religous Studies.

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