# Are mortgages and bank loans the riba forbidden in the Quran? *Are mortgages and bank loans the Quranic riba? Banks, legal protection and who is giving more* - URL: https://muftiabulayth.org/r/ucdrblygy70/s/7/ - Date: 2017-10-19 · Kind: lesson · Transcript tier: machine · Recording: Are Mortgages & Bank Loans Haram? - Mufti Abu Layth (21:46–29:45) - Status: general teaching - Watch from the start of the segment: https://www.youtube.com/watch?v=ucdrbLyGY70&t=1306s - Recording page: https://muftiabulayth.org/r/ucdrblygy70/ **Topics:** Riba, mortgages and loans; Islam and modernity **Summary (not a quotation; machine-made, unchecked):** Mortgages and bank loans are not the riba forbidden in the Quran, which addressed a tyrannical loan-shark culture. Today's borrower is the one giving more, not taking, and is protected by a legal framework of cooperation, debt management and bankruptcy. **Checked position (checked by two independent reviews, not by the channel):** Mufti Abu Layth holds that mortgages and bank loans are not the riba forbidden in the Quran, which was declared war on because of a tyrannical loan-shark culture unlike today's regulated banking, in which the borrower gives back more out of necessity and is legally protected. **Evidence, his words at 22:11:** “Are these things riba? These things are not riba in the Quranic sense, in my understanding.” (https://www.youtube.com/watch?v=ucdrbLyGY70&t=1331s) ## Longer summary Mufti Abu Layth turns to what bothers people today, who do not barter but want a mortgage or a loan, and says that in his understanding these are not riba in the Quranic sense, despite the similarity that more is repaid than taken. He gives his reasons: the concept of a bank or corporation buying a house for someone to repay over a lifetime did not exist in the Prophet's time; riba was made haram because of a diabolical loan-shark culture of extortion, which today's banking does not resemble; and the borrower is not the one taking but the one giving back more, out of necessity rather than greed. He says a mortgage operates within a greater legal framework in which the bank cooperates with a defaulter because it is in its interest not to seize the property, giving six months to a year compared with eviction after two months by a private landlord, and that debt management programmes, IVAs and bankruptcy lasting twelve months without seizure of essential assets protect the borrower, whether or not the bank mentions them. He says the war the Quran declared was on tyranny, not on this. He then summarises: it was never clear what riba meant, there has never been agreement on which kinds are haram, and today's loans and mortgages, though they take back more with inflation and profit built in, do not operate like the barbaric loan-shark culture and come with a safety net. ## Sources and names cited - riba - Quran 2:279 (be informed of a war from Allah): https://quran.com/2/279 - a ruling does not continue when its cause has ceased ## Transcript (machine tier, 21:46–29:45) [21:21] Like swords in the past, I'll give you one sword for two swords. I'll give you this shield for this many shields. Right. Why am I Why am I explaining this? I'm going to come to I'm going to make it relevant for us in a moment, but I need to explain this to show that there was never from the offset any clarity in what riba was actually speaking about. [21:46] It's important to understand that. Right now, okay, moving on from all of this. Right. What about in our the We need to come to what bothers people because people today don't barter, generally. They're not going to swap apples and oranges and do things like this. But, they want to buy a house on mortgage. [22:11] They want to take out a loan. Are these things riba? These things are not riba in the Quranic sense, in my understanding. Yes, they may have some similarities in the sense that there is some excess of repayment. So, you're seeing a similarity like that element and you're assuming, oh, because of that similarity, this is the Quranic riba. [22:36] It's not. Why is this not the Quranic riba? Because everything is different. Now, first of all, when a when you go to a bank to take a loan and they give you this sorry, they give your mortgage, they you know, they buy the house for you and you repay this house over, you know, almost lifetime. [23:04] And obviously, they've tied in inflation and stuff like this. This concept as a concept did not even exist back then. This thought of first of all, of banks doing this, corporations corporations did not exist, banks did not exist. This thing of I'm giving you a money, I'm buying the house for you, you are buying it back or you are paying me did not even exist as a concept. [23:33] Okay, to start off with. Whether whether we want to say that they are buying the house or they're giving you the money, I mean, they're doing it all, but okay, technically, the money is on your name. It did not even exist as a concept. So, back then in the prophet's time, this was never happening. Nobody was going to one of the Quraysh and people were saying, hey, right, people were saying, hey, uh will you buy me this house, pay me this much, and I'll pay you back over this portion. [24:04] Never happened. This concept did not even exist. Okay. So, let's take that as one element. The other element is we have to understand that why riba was made haram was because of the excessive extortion loan shark loan shark culture that was diabolical. [24:32] Because of that, riba was made haram. This today does not fit that. Right now, this today, right, you are not like nothing like that happens. You are operating within a greater framework. Okay, when you take out a mortgage, right, you are operating within greater legal parameters of commerce and of the banking structure. [25:03] So, for example, people say, yeah, but you pay back more. Of course, first of all, first of all, another point to throw in here, you are not the person taking the money, you are the person giving the money. Okay, no person in their right mind would ever want to give back more than they took. But, it's only because of a necessity that, you know, you you don't have the money to start off with, so you're taking the money. [25:32] Otherwise, nobody's going to say, yeah, you know what, I'll happily give you back more money than I took in the first place. Nobody happily does those things. So, let's get that straight to start off with. You are not the person taking. This isn't greed. You are the person giving. Okay, that's an important element, too. The other thing, like I said, is you are operating within a safe structure. [26:00] This doesn't work like this isn't a loan shark culture. Like if you cannot pay back your mortgage tomorrow, the bank will actually cooperate with you to pay it back because it's in the bank's interest not to seize the property. It wants you to maintain a long commitment to paying back. Right? So, and people say, yeah, but the banks are I'm not trying to justify banks and banking culture, but what I'm telling you is let's juxtapose that with renting. [26:34] You would have if you rented a property and you couldn't pay, you would be evicted much easier. You'd be evicted after 2 months. Whereas with a bank, you would easily obtain up to 6 months to a year to repay that. It would it would cooperate with you, whereas a private tenant wouldn't. Sorry, a private landlord would not cooperate like that. [27:01] The other thing is that even if you cannot pay back the money, let's say you cannot pay back your mortgage, right? If you can't pay back your mortgage, you can go on to a management program, a debt management program. You can go on to an IVA. You can declare yourself bankrupt. [27:24] Bankruptcy only lasts for 12 months. And they don't even seize your essential assets. I'm just saying, like you would So, for example, a car, you would still keep your car. You'd still keep all kinds of So, you are actually very protected. You are operating within these greater frameworks. So, whether you whether the bank is telling you these things, by the way, you can declare bankruptcy or not, it won't tell you that. [27:51] But, you are operating within that framework. The banks have a legal obligation to cooperate. They have a legal obligation They can't do anything to you should you declare So, what I'm this This program is sponsored by Why am by Bach But, why am I saying this? Because the in the Quran, when Allah declared war, that's not what was happening. [28:20] That was tyranny. Why was it declared so harshly? Why was it rebuked? Because of the tyranny that was unleashed on the back of this. Now, there's another point I'm about to say. Now, this is an important point. I need you to focus. Tawajjo farmao. [28:46] Tawajjo Tawajjo farmao. That is, people, this is now the icing. So, that's some of the things I I wanted to highlight. That first of all, look, riba, it's never been clear what riba actually meant to start off with. Secondly, there's been confusion all along in what kinds of riba are haram and ain't. [29:11] There's never been an agreement. Thirdly, the banking today and loans and mortgages do not operate like that diabolical kind of uh that barbaric loan shark culture. They don't operate like that at all. They do take back more from you. They have their versions of they're trying to tie this into uh inflation with some profit. [29:38] Yes, they do that. But, you have a greater safety net at all times. Now, the other key thing that I'm about to go into and this is incredibly important. That is people, we have to understand that just that the concept of commerce and economics has entirely changed. ## Cite Mufti Abu Layth Archive, segment ucdrbLyGY70/s/7. https://muftiabulayth.org/r/ucdrblygy70/s/7/ Not a fatwa: these answers were given to specific people at specific times. Ask a qualified scholar about your own situation.