Assalamu Alaikum,

I have been studying your discussion of riba in Meezan, along with your detailed explanations in the “23 Questions” series. I would be grateful for your clarification on one point concerning conventional home mortgages.

Before presenting the question, I want to summarize my understanding of your position so that any misunderstanding on my part can first be corrected.

As I understand Meezan, your position is approximately as follows:

The prohibition of riba falls within the Qur’anic prohibition of consuming another person’s wealth through an unjust means. Riba is not confined to an exploitative loan given to a poor person. A loan may be taken for personal need, commercial activity, or another purpose, but if it is genuinely a loan, the nature of riba is not changed merely because the borrower is wealthy or because the money is being used productively.

My further understanding is that you define interest, in its essential form, as an increment that a lender requires in return for allowing another person to use money for a specified period. A loan, therefore, is fundamentally different from a sale, lease, or other transaction in which compensation is received for transferring ownership, providing the use of an asset, or rendering a service.

I also understand your distinction between things that are consumed through use and things whose substance remains while their benefit is used. Money lent to another person is consumed in the transaction and its equivalent is later returned, whereas a house, vehicle, or similar durable asset can remain in existence while its usufruct is provided in exchange for rent.

This framework appears very coherent to me.

The difficulty arises when I try to apply these principles to a conventional home mortgage.

In an ordinary conventional mortgage, as I understand it, the bank does not normally purchase the house as its own property and then lease that property to the customer. Nor does it ordinarily purchase the house and subsequently sell it to the customer at an agreed deferred sale price.

Instead, the bank provides funds for the purchase. The purchaser becomes the owner of the house, while the bank retains a security interest in the property against the debt. The purchaser generally bears the responsibilities and risks associated with ownership, while the obligation owed to the bank consists of the principal amount advanced plus a predetermined additional amount over the agreed period.

This creates the following difficulty for me.

If the bank has provided money rather than the usufruct of a house, and if the house is principally security for the repayment of that money, then how does the additional amount paid to the bank become compensation for the use of the house rather than an increment upon the loan?

To put the question more simply:

If a bank lends $400,000 specifically for the purchase of a house and requires the borrower to repay the $400,000 together with a predetermined additional amount over thirty years, does restricting the use of the money to the purchase of a particular house change the underlying transaction from a loan into a sale or lease?

For comparison, suppose someone lends another person $50,000 on the condition that the money may only be used to purchase a particular vehicle, and requires $70,000 to be repaid over several years. The vehicle belongs to the borrower and serves as security for repayment. Would the fact that the loan was restricted to the purchase of a durable asset make the additional $20,000 compensation for the use of the vehicle rather than an increment on the loan?

This is where I am finding it difficult to reconcile the mortgage conclusion with the definition of riba presented in Meezan.

There is another aspect of your argument that makes the question more important for me. My understanding is that Meezan does not restrict riba to loans taken by the poor or to situations involving obvious exploitation. Even a commercial loan does not cease to be a loan merely because the money is being used to generate economic value. If that understanding is correct, then it would appear that the beneficial purpose of a home mortgage , acquiring a residence, creating family stability, or financing a valuable asset , cannot by itself change the character of the underlying loan.

Therefore, I would greatly appreciate clarification on the precise legal and economic feature that, in your view, distinguishes a conventional purchase-money mortgage from an ordinary interest-bearing loan.

Is your position that:

the mortgage is not genuinely a loan in its economic substance;

the bank should be understood as providing the usufruct or financing of the house rather than lending money;

the additional payment is compensation for a service or benefit distinct from the loan itself;

or is there another principle in Meezan that I have not correctly understood?

I am not asking this to defend either the conventional juristic position or any modern alternative. I am trying to understand the issue directly from the principles you have presented in Meezan and to see how those principles consistently lead to the permissibility of a conventional home mortgage.

If my summary of your position is inaccurate at any point, I would be grateful if you would first correct that misunderstanding.

JazakAllah khair for your time and for your work in explaining these issues in a principled and accessible manner.

Warm regards,