Is real estate financing unlawful if the bank pays the price of the apartment to the owner, and then the buyer pays it in installments to the bank, knowing that the apartment is not owned by the bank?

Real estate financing in the described form is forbidden and void, because it is usury (riba). The bank pays the price on behalf of the buyer, then collects it from him with usurious interest. Allah has permitted trade and forbidden usury, and has threatened those who consume it with war. The Prophet, peace and blessings be upon him, cursed the consumer of usury, its payer, its scribe, and its two witnesses.

However, if the bank first owns the house and then sells it to the one who orders its purchase, even for more than it bought it for, there is no harm in that, because it is a murabaha sale or an installment sale. It is not permissible to engage in forbidden usury except in cases of genuine necessity. Necessity is defined as a person reaching a point where, if they do not consume the forbidden, they would perish or be close to perishing. Whoever finds a dwelling to live in, even if by rent, is not in a state of necessity to engage in usury for ownership.