The conventional mortgage includes interest so it is prohibited.
يَاأَيُّهَا الَّذِينَ آمَنُوا اتَّقُوا اللَّهَ وَذَرُوا مَا بَقِيَ مِنَ الرِّبَا إِنْ كُنْتُمْ مُؤْمِنِينَ (278) فَإِنْ لَمْ تَفْعَلُوا فَأْذَنُوا بِحَرْبٍ مِنَ اللَّهِ وَرَسُولِهِ وَإِنْ تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَالِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ (279)
O You who believe! Fear Allah and abandon that which remains of usury if you are indeed believers. If you do not do so, then know that you are at war with Allah and His Messenger, and if you repent then you may retrieve your principal amount, causing no oppression and suffering no oppression. (Surah al-Baqarah, 278 – 279).
Taking a conventional mortgage is Haraam, due to the interest charged. Some people try to justify it under the rule of necessity, they say, you need to purchase a house in order to have somewhere to live. This argument is not valid since renting is an option, therefore one can have a place to live without purchasing a house.
Renting may be a less desirable option when compared to owning one’s own property. However, when something is prohibited, then the Muslim is required to give up what they finds more comfortable or desirable for the sake of Allah (Most High). This is the test in this life, are you willing to give up something desirable if it is prohibited by Allah (Most High)?
However, if one can find a Halal way of financing a house purchase then they may pursue it.
And Allah (Most High) Knows best.
– Answered by Shaykh Noorud-deen (01.03.2021)
Is it permitted to take an Islamic Mortgage?