The Ruling on a Loan Conditioned on Interest

The questioner:
'Abd al-Rahman from Riyadh, please, 'Abd al-Rahman. Peace be upon you. And upon you be peace. How are you, Shaykh? May Allah welcome you, please go ahead. May Allah keep you safe. I have a bank that gives me a real estate financing of nine hundred thousand, and I got a house worth eight hundred thousand. So, based on the fact that I need the remaining amount of the financing, so based on that I can take the remaining amount. I agreed with the owner and the real estate owner that we raise the value of the house, and when the check comes from the bank, the owner takes the original value of the house and I take the remaining amount so that I can pay off my debts and set up the new house. Thank you. Yes, indeed. Thank you.

The Shaykh:
My brother, is this financing from the category of a loan?

The questioner:
Real estate financing.

The Shaykh:
Yes, financing from the category of a loan; it lends you money and you buy a property with it.

The questioner:
Yes, that is correct. It lends it to me, yes.

The Shaykh:
The loan takes interest from the bank.

The questioner:
Yes, it takes interest on the value of the house over several years.

The Shaykh:
My brother, a loan does not have interest. A loan is a good loan; you fulfill your need and return the amount as it is, without a conditioned increase. If there is a conditioned increase, this is explicit riba (usury or interest). Every loan that brings a benefit is riba.

The presenter:
Okay, yes.