Sunday | 21 April 2024 | 12 Shawaal 1445

Fatwa Answer

Question ID: 1095 Category: Dealings and Transactions
Building a house in Illinois using conventional loan with intention to refinance to Islamic loan

Assalamualaikum Respected Ulamaa,

I would like to know the following:

We would like to build a small (equal to or less than 1200 Sq feet) house in the state of Illinois. We have contacted all Islamic Interest-Free Loan companies and none of them are offering construction loans. We have purchased twice using these Islamic interest-free loan companies but had to sell our homes both times because we have a child with special needs and the houses both times did not meet our needs. We have spent the last 5 years looking at houses in the area (close to jobs, special education school) but unforunately have not found a house that meets our needs for our child with special needs. We need a very small home with some specific accomodations but we are unable to find one in the last 5 years. Our children are getting older and they need a place to remain stable. We were interested in building a small house according to our needs but since no Islamic company offers construction loans, we only have the option of conventional interest loans in the area. We wanted to know if we took a construction loan from a conventional bank (UnIslamic), and after our house is built but before we took posession of it (before we move in) we wanted to refinance the loan from an Islamic Riba-free bank so that our loan becomes riba-free. Please advise if this will be permissible to construct home on a conventional loan and then refinance it to an Islamic interest-free loan once the house is completed construction and before moving into it.


الجواب وباللہ التوفیق

It is not allowed to acquire interest based loan to build a house, especially when you already have a house.

To purchase two houses to cater for the special needs of your child falls under “waste by access” which is disliked in Qur’an.

While it is encouraged to ponder upon matters according to their extent of necessity and convenience, it is however highly disliked to indulge in an issue to the extent of making it an ultimate objective of one’s life.

فقط واللہ اعلم بالصواب



Question ID: 1095 Category: Dealings and Transactions