Difference Between Riba and Mortgage

Question 

As-Salamu `alaykum! Would you please send me some information on the basic differences between mortgage and Riba, and on the right way in Islam to do mortgage? May Allah bless you.

Answer

Wa`alykum As-Salamu wa Rahmatullahi wa Barakaatuh. 

In the Name of Allah, Most Gracious, Most Merciful. 

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger. 

Dear questioner, we would like to thank you for showing keenness on knowing the teachings of Islam, and we appreciate the great confidence you have in us. We hope our efforts meet your expectations. 

Responding to the question, Dr. Monzer Kahf, Scholar in Islamic Economics & Financial Expert, states the following: 

"The International Webster New Encyclopedic Dictionary defines mortgage as a conditional transfer of a property to a creditor as security for repayment of money. In practice of home purchase financing in the United States, mortgage means getting finance from a bank, conventionally on the basis of interest and recording a lien, normally, on the same house to the benefit of the bank until full payment of the amount financed and interest accrued is done. 

Normally, payments are made equal and monthly, so that each installment consists of the interest due on the balance from last month and a portion redeemed of the principal financed. 

Riba in Arabic language is increase or increment. Riba is defined in the Shari'ah as an increment in an exchange contract that has no Shari'ah recognized counterpart. The OIC Fiqh Academy of Jeddah and the Al-Azhar Islamic Research Academy, in Cairo as well as the overwhelming majority of Muslim Scholars ruled that interest that appears in banking transactions is the same Riba that is forbidden in the Qur'an. 

Finally, Islamic financing may have liens on any property as a security for repayment of the money financed, i.e., it may have mortgage, in the language meaning, without being based on interest Riba." 

If you have any further questions, please don't hesitate to write back! 

May Allah guide you to the straight path, and guide you to that which pleases Him, Amen. 
 
  
 
Allah Almighty knows best.