📘 Q&A Collection: Student Loans, Riba, Mortgages & Halal Finance

Dr. Mahmoud Omar

Organized by Topic for Clarity

🎓 STUDENT LOANS & FINANCIAL AID

1. Q: Can a student take a loan just to access attached grants, if they already have enough money?

A: Yes, if the loan is interest-free for a set period (e.g., six months) and the borrower:

Does not need the loan itself
Plans to repay it within the interest-free period
Takes it solely to access grants

Then this is permissible, based on the principle:

“Al-umūr bimaqāsidihā” – Actions are judged by intentions.

2. Q: Are student loans that include interest (riba) permissible in Islam?

A: No. If the loan contract contains riba (interest), then it is haram by default.

3. Q: What if the student loan has no interest?

A: If the interest is completely waived, such as the Canadian federal loan, then the loan is permissible.

4. Q: Can I take a loan with a six-month interest-free period?

A: If you are 100% certain you will pay off the loan before interest is charged, it is permissible. If there is any risk you won’t repay in time, it becomes impermissible due to the riba clause.

5. Q: Can students take riba-based loans if there are no halal options and they can’t afford education otherwise?

A: Yes, in this case, it falls under darurah (necessity) and is permissible temporarily, as long as:

The student genuinely cannot afford tuition
No halal alternatives are available
The loan is used only for what’s needed
The career is a career that the Muslim community is in need of and will benefit the community. (eg. Doctor, nurse, teacher, etc. If someone decided to take out a loan to go into acting or art for example that would not be considered a necessity therefor not permissible)

6. Q: If a student or their family has enough money but chooses not to use it and instead takes a riba-based loan, is it allowed?

A: No. This is not a necessity. Choosing riba out of convenience or to “take advantage” of loans is sinful.

7. Q: If I have wealth or my parents can pay, can I still take the loan?

A: No. That is not a darurah (necessity). Choosing to take a loan just to save your own money or out of convenience is sinful.

8. Q: If a federal student loan is enough, can someone still take a provincial (riba-based) loan?

A: No. If the federal halal/interest-free loan is sufficient, you are not permitted to take additional riba-based loans from other sources.

9. Q: What if the federal loan is not enough to cover education expenses?

A: In that case, if no halal option is available, you may take the riba-based loan with the intention to repay it as soon as possible, under the darurah (necessity) ruling. (see Question # 5)

🧾 ADMINISTRATION FEES

10. Q: Are administration or processing fees allowed in Islamic finance?

A: Yes, as long as they are flat and fixed, and not linked to the loan amount.

11. Q: When do administration fees become impermissible?

A: If the fee increases based on the loan size, it is considered riba in disguise.

✅ Example of permissible:

Loan = $100,000 → Fee = $50
Loan = $2,000 → Fee = $50

❌ Example of impermissible:

Loan = $100,000 → Fee = $1,000
Loan = $5,000 → Fee = $50

💡 UNDERSTANDING NECESSITY (DARURAH)

12. Q: What is considered “darurah” (necessity) in Islamic law?

A: Darurah refers to a situation where:

A person faces harm or serious loss without a prohibited act
No halal alternatives are available
The action is taken only to the extent necessary

13. Q: What is the difference between a general ruling and a darurah-based exception?

The general ruling on riba is always haram.
But in exceptional cases of darurah, riba may be temporarily allowed.

The exception does not change the ruling, it only applies to rare cases.

14. Q: What is the principle regarding alternatives and necessity?

“If a halal alternative exists, there is no darurah.”
You must exhaust all Islamic options before considering a prohibited one.

🏠 MORTGAGE & HOMEOWNERSHIP

15. Q: What is the general Islamic ruling on riba-based mortgages?

A: The general ruling is that riba is haram. Taking a conventional mortgage involving interest is not permitted.

16. Q: Can someone take a riba-based mortgage due to housing difficulties?

A: Only in extreme necessity (darurah)—such as when a person with many dependents cannot find any place to rent, is being rejected due to family size, or faces possible homelessness. In these specific cases, a case-by-case fatwa may permit a mortgage.

17. Q: ❓ Is paying rent better than taking a haram mortgage?

A: Yes. Paying rent is better than entering into a haram (interest-based) mortgage. While renting may not build ownership, it avoids the sin of riba, which is a major prohibition in Islam. Waiting for a halal option is always the better path.

18. Q: Can someone take a mortgage if renting is still an available option?

A: No. If renting is possible, riba is not allowed.

19. Q: Can a scholar give a general fatwa permitting mortgages for all Muslims?

A: Absolutely not. Rulings allowing riba are for very specific individual cases. The general fatwa remains:

Riba is haram.

20. Q: What should someone do if a halal mortgage is not yet available, but will be soon?

A: The person should wait until the halal mortgage becomes available, especially if it’s only a matter of a few months.

21. Q: Are Muslims allowed to take mortgages today when there are halal mortgage alternatives?

A: Now that halal mortgage options are available or soon becoming available, Muslims must take the halal option. If you still choose a conventional mortgage while halal is available, it is not permissible.

22. Q: Can someone buy multiple houses using halal mortgage?

A: Yes. Once the mortgage is structured Islamically, there is no limit. You can buy 1, 5, or 10 homes—because it is not riba-based.

23. Q: Can someone use the halal mortgage for business purposes?

A: Yes. Although currently the halal mortgages that are available are only for individuals, not businesses. You may:

Buy several properties
Rent them out
But not under a business name—yet.

🚗 CAR LOANS & PERSONAL FINANCING

24. Q: Is it permissible to take a riba-based loan to buy a car?

A: No. Car loans that involve interest are not permissible if halal alternatives exist (e.g., in-house financing).

25. Q: What if luxury car brands don’t offer halal options (e.g., Mercedes)?

A: That does not justify taking riba. One should choose a more affordable vehicle with halal financing options. Owning a luxury brand is not considered a necessity.

🛠️ FATWA PRINCIPLES & INTENTIONS

26. Q: What is the meaning of “al-umūr bimaqāsidihā” and how does it affect rulings?

A: It means:

“Matters are judged by their intentions.”
This principle allows scholars to consider:

A person’s purpose
The context and risk
Whether the action is done to facilitate riba or to protect from harm

❓ Does “maqāṣid” mean intention?

Not exactly.

Maqāṣid (المقاصد) = objectives, goals, or purposes
Niyyah (النية) = intention

So in Arabic:

“Al-umūr bimaqāsidihā” literally means:
👉 “Matters are according to their purposes or objectives.”

But in usūl al-fiqh (Islamic legal theory), this maxim often overlaps with the idea that intention determines the legal ruling of an action — which is why it’s sometimes explained in connection with niyyah.

💡 So why is this maxim linked to intention?

Because in many cases, the goal or purpose (maqṣid) behind an action reveals the true intention, and that affects whether the action is valid, halal, haram, etc.

🧠 Summary:

Maqāṣid = goals or purposes (not exactly the same as intention)
But in this maxim, the goal often reflects the person’s intention, so scholars use it to judge actions based on what the person really meant.

So, the meaning could also be “matters are judged based upon their end goal”

27. Q: Can personal hardship or legal difficulty justify taking riba in some cases?

A: Yes, but only when it results in:

Personal harm, such as homelessness
No available halal options
A clear plan to repay quickly

One still requires a scholar to evaluate their scenario in order to determine the fatwa (ruling) specific for their case.

🧱 HALAL MORTGAGE DEVELOPMENT IN CANADA

28. Q: Is a halal mortgage coming to Canada?

A: Yes. The first halal mortgage is expected to launch in Alberta, inshaAllah, led by the Canadian Islamic Finance Board.

29. Q: Will the halal mortgage follow Islamic principles?

A: Yes. It will be based on Murabaha (buy & sell) and monitored by qualified scholars to ensure full Shariah compliance.

30. Q: Who approves halal mortgages in Canada?

A: The Canadian Islamic Finance Board (CIFB)—a group of trained scholars and experts who:

Scrutinize contracts
Monitor implementation
Provide training
Offer community education

31. Q: Are the scholars involved paid for their work?

A: No. All scholars on the CIFB serve as volunteers, including travel and accommodation expenses. They do it for the sake of Allah.

32. Q: Does a product become halal just because a fatwa says so?

A: No. Fatwas are issued after extensive review. A product is only declared halal if it genuinely meets Shariah standards.

33. Q: Is the halal mortgage a workaround for riba?

A: No. The halal mortgage uses contracts like murabaha (cost-plus sale) that are fundamentally different from riba-based loans.

34. Q: Can Muslims confidently use a halal mortgage once it’s launched?

A: Yes. Once approved by the Islamic Finance Board, it is no longer a riba concession but a fully halal contract.

35. Q: Can non-Muslims use halal mortgages?

A: Yes. Halal finance is open to everyone, regardless of faith.

🌍 PUBLIC MISCONCEPTIONS & ETHICS

36. Q: What should we say to people who fear halal mortgages are “Sharia law” in Canada?

A: Halal mortgages are optional financial products, not legal systems. Just like halal chicken, they’re available to all but imposed on none.

37. Q: Why are Islamic finance scholars so cautious?

A: Because they will be accountable before Allah for every fatwa. Their responsibility is immense, and every ruling is made with deep research and sincerity.