The issue is subsidiary to the matter of dealing with interest (usurious increase), meaning ribā, in non-Muslim countries (as opposed to Muslim countries). We have discussed this several times before, and there are two main opinions on this matter:
- The Majority Opinion: This view does not differentiate between Islamic and non-Islamic lands in terms of legal rulings. According to this opinion, a contract that is invalid in Islamic lands is also invalid in non-Islamic lands. They base their reasoning on the generality of the Quranic verses on ribā and the universal conditions of validity and invalidity.
- The Ḥanafī School and Some Ḥanbalīs: This view differentiates between contracts made in Islamic and non-Islamic lands. They validate contracts with invalid conditions in non-Islamic lands, including those involving interest. They have provided their evidence which I mentioned in the discussion on “Ribā in Non-Islamic Lands,” in a form of a research paper titled “A Summary of the Ḥanafī Opinion on Invalid Contracts in Non-Islamic Lands,” which is available on the website.
We prefer the opinion of the Ḥanafī school and some Ḥanbalīs.
Accordingly, there is no harm in following this opinion and obtaining a line of credit or taking an additional loan using the house as collateral to meet your needs.
Fatwa issued by Dr. Khālid Naṣr
