Tuesday | 05 March 2024 | 24 Shabaan 1445

Fatwa Answer

Question ID: 1693 Category: Dealings and Transactions
Difference between loan from builder

Assalamualaikum wbr,

I am buying a new home, Islamic financing is offering loan at 7.5 while builders own financing company is offering loan at 4.5 mortgage rate. Over all difference on monthly payment is almost $700, just wondering which choice I should be making here. JAK kasira 

بسم اللہ الرحمن الرحیم

الجواب وباللہ التوفیق

In Islam, it is forbidden to take or give interest for any purpose, so avoid usury in dealing with both lending institutions. 

Since you are a resident of the USA, you can take loan through Devon Bank in Chicago, which operates under the Shariah Guidance of the Shariah Board.

قال اللہ تعالیٰ:  وَأَحَلَّ اللّٰهُ الْبَيْعَ وَحَرَّمَ الرِّبَا۔ (البقرہ: ۲۷۵

فقط واللہ اعلم بالصواب