Is it permissible or forbidden to mortgage a house for a fixed period of residence, returning the same amount while taking a small rent, and is this considered usury?
If a loan brings benefit to the lender, for example, if the lender pays a meager rent ($100 annually) for a house whose rent is $200, this is usury (riba) forbidden by scholarly consensus. This is because the lender benefited from the difference in rent ($100) in exchange for his loan. Therefore, every loan that brings a benefit is usury. It is not permissible for the lender to benefit from the collateral unless he pays its full rent at the market rate; otherwise, it would be usury, even if it is with the consent of both parties. It has been narrated that Imam Ahmad disliked "qardh al-dur" (loaning houses), which is pure usury.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
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