Property bought on installments

Q512 :I intend to buy a house in my native place, paying 50 percent of the value to start with, and paying the balance by monthly installments. This will inevitably increase the price. However, it is the only way I can manage to have a house of my own. Is there anything wrong with this method of purchase?

A512 : It is well-known practice that when you buy anything on the basis of paying its price, or part of it, sometime later, then the price of that article is set higher. In Islamic terminology, this is referred to as "term" purchase. When you tell the owner that you want to buy that article and agree to the terms of payment, he will tell you that you may have that article for say, 50 if you pay immediately and, 55 if you pay after three months. This is perfectly acceptable. This is neither interest not usury. It is simply a raising of the price agreed at the time of purchase in return for a particular facility of payment. Scholars agree that this is perfectly permissible. This method applies to buying anything on installments. There is a mutual benefit to the buyer and seller in this method. The buyer spreads amount which relieves the burden of having to pay the whole amount at the beginning and the seller has the commodity sold and receives a higher price for it in return for waiting for payment. There is no harm in that.

Our Dialogue ( Source : Arab News - Jeddah )