What is the ruling of Islamic law regarding real estate financing in which the bank purchases the property and it remains mortgaged to the bank until the completion of payment, with an annual interest rate ranging between 7-8%?
Source: FtawySummary from Ftawy's records · added here Sep 2, 2026
Distinguishing between the forms of real estate financing is important when issuing a ruling on it. If the bank purchases the property and it enters into its possession and guarantee, then sells it to the buyer at a profit, then that transaction is permissible, like a Murabaha sale, and it is permissible for the bank to mortgage the sold item to guarantee its right. However, if the bank stipulates an additional profit in case of late payment, this is an usurious condition that renders the financing prohibited.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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- Ftawy
- Original fatwa ID
- 133088
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- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
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