Question ID: 27974
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Asalaamwualaikum. All Praise is due to Allah (SWT). Mufti, with the salary that I earn, it is impossible for me to buy a house at current prices.I have made inquiries at a local Islamic Bank. They offer a product where the bank purchases a house, adds a profit to the purchase price and the re-sells the property on to a client. The client then pays off this total amount [which is fixed] at monthly intervals over a period of several years. Is this form of financing permissible or does it constitute an interest bearing transaction? The reason I ask is because conventional banks also offer to “fix” the interest rate on a home loan, whererby one will also pay a fixed monthly installment over a number of years.

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Asked on November 12, 2008 12:00 am
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If the resale capital amount is fixed, and the instalment amount is fixed and you should have an option for settlement and when both parties agree on this then the transaction is permissible
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Answered on November 12, 2008 12:00 am