Rent keeps rising. Everyone around you seems to be buying. Your parents bought with a mortgage and never thought twice. And somewhere underneath it all is the question you haven't settled: is this riba?
Or you've been offered a good job at a bank. Or you've just noticed the interest sitting in your savings account and don't know what to do with it.
These are some of the most common money questions Muslims bring us. Here is what the scholars actually say — including where they disagree.
The Short Answer
Riba — interest — is prohibited in Islam. That isn't disputed.
On conventional mortgages, scholars differ. The majority, including the International Islamic Fiqh Academy, hold them impermissible. A minority — notably the European Council for Fatwa and Research — permit one under strict conditions: a primary family home, where no viable Islamic alternative exists.
Working directly in interest-based transactions is impermissible. So is working in conventional insurance; takaful is permissible.
Interest you've already earned can't be kept. It should be given away to public welfare or the poor — to rid yourself of it, not as charity.
What riba is
"Allah has permitted trade and forbidden riba." — al-Baqarah 2:275
Riba is an increase charged on a loan — money made from lending money. A conventional loan, credit card, or interest-bearing account all involve it.
And the prohibition reaches further than the person who profits:
"The Messenger of Allah ﷺ cursed the one who consumes riba, the one who pays it, the one who writes it down, and the two who witness it — and he said: they are all equal." — Sahih Muslim
The payer is named alongside the receiver. That's why a mortgage — where you pay the interest — is a serious question, not a technicality.
Is a mortgage haram?
This is where scholars genuinely differ, and you deserve to know both positions.
The majority position: impermissible
The International Islamic Fiqh Academy and the major scholarly bodies hold that a conventional mortgage is unlawful, because it's an interest-bearing debt.
Their reasoning on necessity: renting is available. Since a person can live in rented housing, owning a home isn't a genuine necessity (darurah) that would lift the prohibition.
The minority position: permitted under strict conditions
The European Council for Fatwa and Research (ECFR), with some other scholars, permitted a conventional mortgage — solely for buying a primary family residence, and only where no viable Islamic alternative exists.
Their reasoning draws on the Hanafi position on financial transactions in non-Muslim lands, together with the principle that a widespread communal need (hajah) can be treated like a necessity.
What that means for you
Read the conditions of the minority view carefully. It isn't a general permission. It doesn't cover buy-to-let, a second home, or an upgrade to a larger house. It applies to one family home, and only where Islamic home finance isn't realistically available to you.
Where Islamic home finance is available, explore it first. Many people assume it isn't an option without checking.
And this is a decision to make with a scholar, about your specific situation — not on the strength of an article. Which view you follow, and whether your circumstances meet its conditions, matters too much to settle alone.
Is working in a bank haram?
Roles directly involved in interest-based contracts are impermissible — processing, recording, calculating or assisting in them. That's the hadith above: the one who writes it down and the witnesses are named alongside the one who consumes it.
The prohibition is tied to involvement in riba itself. Whether a specific role crosses that line depends on what the job actually involves — a question worth putting to a scholar with the job description in hand, before you accept.
Is working in insurance haram?
Working for a conventional insurance company is impermissible, because its core business rests on excessive uncertainty (gharar) and interest (riba).
Working in takaful — cooperative, Islamically structured insurance — is permissible.
What should I do with interest I've already earned?
Many people discover interest has built up in a savings or current account without them ever choosing it. Here's what the scholars say:
You can't keep it or use it for yourself. Not for personal spending, not for your family's upkeep, not to pay your own debts or taxes.
Don't leave it with the bank either. Abandoning it to an interest-based institution only strengthens it.
Withdraw it and give it away — to public welfare projects (roads, sanitation, hospitals) or to the poor and needy.
And do it with the right intention. This isn't sadaqah, and you shouldn't expect reward for it as charity. The intention is takhallus — ridding yourself of money that isn't lawfully yours.
Your own income, if you're a wife
If you work, your earnings are yours. Your husband's obligation to maintain you doesn't change because you earn, and he has no claim on your salary. What nafaqah covers.
Questions this article doesn't cover
Crypto, stocks, pensions, student loans, credit cards, and buy-now-pay-later each have their own considerations, and the answers depend on the details of the product. Rather than guess, ask — the free question below is exactly for this.
A note on this article
This article is for reference only. It is not a ruling, and it is not financial or legal advice.
It sets out what scholars hold and where they differ. Whether a mortgage, a job or an account is permissible for you depends on facts only you have — the product, the role, the alternatives available where you live.
For your own situation, speak to a verified Islamic scholar — free and private on Khidma.live, and nobody is told. For the financial side, speak to a qualified adviser.
Frequently Asked Questions
Is a mortgage haram in Islam? The majority of scholars, including the International Islamic Fiqh Academy, hold a conventional mortgage impermissible. A minority, including the ECFR, permit one for a primary family home where no viable Islamic alternative exists.
Is a mortgage halal in the UK? The same difference applies. The minority permission is narrow — one family home, only where Islamic home finance isn't viable. Ask a scholar about your circumstances.
Is renting better than a mortgage in Islam? On the majority view, yes — renting is available, so owning a home isn't a necessity that would lift the prohibition on riba.
Is paying interest as bad as receiving it? The Prophet ﷺ cursed the one who consumes riba, the one who pays it, the one who writes it, and its witnesses, and said they are equal (Sahih Muslim).
Is it haram to work in a bank? Roles directly involved in interest-based contracts — processing, recording, calculating, assisting — are impermissible. Whether a specific role is depends on what it involves.
Is working in insurance haram? Conventional insurance is impermissible because it rests on gharar and riba. Takaful is permissible.
What should I do with interest money in my bank account? Withdraw it and give it to public welfare projects or the poor — with the intention of ridding yourself of it, not as charity. Don't keep it or leave it with the bank.
Can I use interest money to pay taxes or debts? No. It can't be used for any personal benefit, including taxes, debts or family expenses.
Is interest money sadaqah if I give it away? No. You give it away to rid yourself of unlawful money, not expecting the reward of charity.
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