Conventional and Islamic finance of home purchase : conventional mortgage use

Fatawa Question

Assalaamu Alaykum, I would like your opinion on a matter regarding the use of a conventional mortgage in the setting of an existing loan. I am a married resident physician at the University of Pennsylvania and have approximately $ 30,000 of outstanding student loan debt (from medical school) that I am paying off in monthly installments. My wife and I have thus far been renting an apartment and we're currently looking for a different place given that our lease expires in several months. Philadelphia in general is a relatively expensive place to rent an apartment (in a safe part of town) and given this we have thought that instead of continuing to rent an apartment, at a cost of approximately $ 32,000 / year, we could instead purchase a condominium using a conventional mortgage (there are not any viable Islamic financing alternatives in this area that I am aware of) and then in two years, when my residency training ends and we move from Philadelphia, we could sell the property and thus recoup most, if not all, of our original purchasing expenses. Then we could use the money saved from not renting, perhaps as much as > $ 20,000, to pay off the interest-bearing student loan debt that I have. I am confused as to whether this would be permissible because although a conventional mortgage is being used, the savings of doing so versus rent would reduce the amount of interest that I have to pay on the student loan debt ; however on the other hand would doing so be an example of "two wrongs do not make a right" ? Thank you in advance for your assistance. Jazaka Allahu Khairan, Amir

Fatwa

Click hereto view more

Publication Date

2008-04-12

Main Subjects

Financial and Accounting Sciences
Islamic Studies

Topics

• Islamic jurisprudence
• Housing
• Financing
• Purchasing
• Real property
• Commercial finance companies
• Subprime mortgage

No. of Pages

1

Data Type

Fatawa

Language

English

Record ID

BIM-734834

• APA
• MLA
• AMA