[mkr32]

Assalamualaikum,

I had a question about mortgages and houses:

If someone gets a house through conventional mortgage in the US (regular US bank) are they able to sell the house for profit before they pay off the entirety of the loan? I read in a few places that a person cannot sell something that they do not own, but would this principle apply to this situation too since the person is on a loan and doesn't really "own" the house until it is paid off?

I know riba is wrong in either direction, but what if a person wants to get out of riba as soon as possible and sees that their home's market value has doubled or tripled. This way they can sell the existing home for a high price, pay off the existing loan, and then purchase a cheaper home to live in with the remainder of the money.

For example:

(Using small numbers)

Original home: $20
Loan amount left: $10
Home sale (mortgage not paid, but market value is higher): $100
Remainder to purchase cheaper home: $100 - $10 = $90

Hopefully I did the math right, but let me know.

 

[*charisma*]

Walaikum Asalaam

I don't know the answer to your question, I suggest you ask a scholar about selling something which you do not own. Also if you have a mortgage, I don't know how you'd be able to sell the house without the bank knowing? There may be some penalty for it which you should look into.

I know in Islam if you make a contract with someone, you have to oblige by the contract and if you take a loan, you have to pay back the loan, even if you have found yourself involved in riba. If there's a way to get out of it by paying back the loan and satisfying the contract then I guess there wouldn't be a problem.

Better to ask someone with more knowledge inshallah.

 

[mkr32]

Thanks, I will try to find a scholar...if you recommend a scholar or a website to go to for more info, let me know please.

This particular bank does not penalize if the loan is paid off early.

The transaction does sort of does feel "haram" to me though since if I were to simplify it and say that a person-1 took any item from person-2 on a loan and is in the process of paying off that loan, then person-1 doesn't actually own the item until the loan is paid off. Therefore, even if the item went up in value while the person-1 was paying the loan, they could could not sell it for a profit since the item is not their's yet. I guess part of the item could be sold depending on how much of the item was paid back...but I think it is good to ask about this as you mentioned.

 

[Misbah-Abd]

Thanks, I will try to find a scholar...if you recommend a scholar or a website to go to for more info, let me know please.

This particular bank does not penalize if the loan is paid off early.

The transaction does sort of does feel "haram" to me though since if I were to simplify it and say that a person-1 took any item from person-2 on a loan and is in the process of paying off that loan, then person-1 doesn't actually own the item until the loan is paid off. Therefore, even if the item went up in value while the person-1 was paying the loan, they could could not sell it for a profit since the item is not their's yet. I guess part of the item could be sold depending on how much of the item was paid back...but I think it is good to ask about this as you mentioned.

This may help Insha Allah...

https://islamqa.info/en/137768

 

[mkr32]

This may help Insha Allah...

https://islamqa.info/en/137768

Thanks! That is very helpful.

I was leaning towards "haram", but it looks like it is ok to do so. Every situation is different, but it seems like here a person doesn't have to completely own the item.

[TABLE="class: grid, width: 100%, align: center"]
[TR][TD]He mortgaged his house with the bank, in order to take out a loan - islamqa.info
My parents made the mistake of getting into a mortgage house awhile back and we have definately seen the effects of that sin. After making countless dua to Alla...[/TD][/TR][/TABLE]