Repaying more than the principal of a loan is prohibited (1/2)
Question
Q. If you were given a loan by a Muslim to purchase an asset ( A Home ) and no specific repayment date was agreed . The asset has appreciated in value , Should the repayment of the loan be the Principal loan amount or should the Amount be re-calculated relative to the Gain in value of the Home.
If the later would that be considered as usuary/ interest ?
Answer
Only the principal of the loan should be paid back regardless of the increase in value of the house. Any amount more than the principal (original amount of the loan) will be Riba (interest) which is prohibited.
Where scholars differ, it’s safer to take the more cautious view.
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Source: Jamiatul Ulama KZN — https://jamiat.org.za/repaying-more-than-the-principal-of-a-loan-is-prohibited/
Fatawa SA: https://fatawa.co.za/fatwa/jamiat-11181-1
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