Stuck between a Rock and Hard Place. Confused.com …about Mortgages, Insurance and Banking The Dangers of Riba Riba literally means increase. Known widely as ‘interest’ and ‘usury’, it is the charge levied for ‘using’ money. In other words, it is where one party makes a profit through lending to another party. It is the increase of money without risk and without effort. Imam Bukhari narrated that the Prophet (peace be on him) related what he saw in a dream: ‘… we came to a red river like blood, I saw a man swimming in it and another on the river bank had gathered many stones. The swimmer started swimming toward the man on the riverbank and when he got to him, he opened his mouth to feed him the stones.’ Then the Prophet (peace be on him) said, that is the riba eater.’ (Bukhari) When is Riba Permissible? The ayahs on riba are crystal clear and the hadith confirm that a loan which is returned with increase is impermissible and hugely sinful in Islam. However in situations of dhoroora (necessity), what is haram becomes permissible- the classic example being the man in the desert who will die unless he eats a ham sandwich. There are five areas to which the shariah preserves our right. These are faith, life, health, wealth and preservation of lineage.  If any of these are threatened, this would be a necessity. Examples of things that constitute necessity: a home, a car if you can’t manage without it for your work, medical treatment and education. Mortgages House prices are so high now, that very few people can buy without taking credit. Interest based mortgages contain riba.  Yet, owning a house is a necessity. Some people argue that owning is not a necessity, as renting is an option. … Continue reading Islamic Mortgages, Insurance and Loans