Educational content only. We analyze remortgaging using
the principles of
Irtikab Akhaff al-Dararayn (Choosing the lesser of two harms)
and Darurah (Necessity).
This is not financial, legal, or religious advice. Please consult a qualified
scholar or professional for your specific situation. We do not issue fatwas.
Thousands of Muslims in the UK are "trapped" in conventional mortgages they took years ago—either before they became practicing or before Islamic alternatives were accessible. When their fixed-term ends, they face a choice: let the rate spike to a high Variable Rate, or sign a new contract to get a lower rate. Is this "renewing the sin" or "minimizing the harm"?
Scholarly consensus overview
Currently, there is no single consensus. Hardline views state that signing any new interest-based contract is a new sin, regardless of the rate. Pragmatic views (often adopted by bodies like the European Council for Fatwa and Research) argue that since the debt already exists, minimizing the financial damage to the Muslim family takes precedence, provided the intent is to exit the debt eventually.
The Dilemma: Renewing the Contract
When your fixed mortgage deal ends, you automatically roll onto the lender's "Standard Variable Rate" (SVR), which is usually punishably high (often 7-9%).
To get a cheaper rate (e.g., 4%), you must actively apply for a new product ("remortgage"). Theologically, this involves signing a new Riba agreement. Finacially, however, staying on the SVR means paying more Riba to the bank.
Tool 1: Riba Exposure Calculator
Use this tool to see the financial reality. Often, the "passive" option of staying on the SVR results in paying tens of thousands of pounds more in prohibited interest.
Riba Exposure Calculator
Comparing the cost of "Staying Put" vs "Switching"
Potential Riba Reduction
Money saved from interest payments
Ethical Paradox: Remortgaging involves signing a new contract with Riba. However, staying on a high SVR involves paying more Riba. Many scholars analyze this under "Minimizing Harm" (Irtikab Akhaff al-Dararayn) if no Shariah alternative is available.
Necessity (Darurah) vs Need (Hajah)
Islamic jurisprudence distinguishes between Darurah (Necessity - life/shelter is threatened) and Hajah (Need - life is difficult but not threatened).
If switching to an Islamic bank is impossible (e.g., they don't cover your area or you have bad credit), scholars then look at whether affording your home depends on a lower rate.
Tool 2: Necessity Assessment
This flowchart helps you be honest with yourself about your situation. Are you remortgaging to save your home, or just to save money for other things?
The 'Exit Strategy' Argument
Some scholars who permit remortgaging do so strictly on the condition that it is used as a tool to exit debt faster.
If you remortgage to a lower rate, you save hundreds of pounds a month. Instead of spending this saving, you should use it to overpay the capital balance. This reduces the term of the loan and removes you from the Riba system years earlier.
Tool 3: Exit Velocity Planner
How fast could you be free if you optimized your remortgage for exit rather than comfort?
Exit Velocity Planner
How fast can you escape the Riba contract?
Freedom Projection
You could be Riba-free by 2040.
The Red Line
Where do scholars draw the line?
While "switching" the existing debt is a grey area of debate, certain actions are unanimously prohibited.
- 1Additional Borrowing (Equity Release):
Remortgaging for a higher amount than you currently owe (e.g., borrowing an extra £20k for a new kitchen or car) is actively taking out new Riba. This cannot be justified by necessity.
- 2Choosing Riba over Halal:
If you are eligible for an Islamic Bank (HPP) but choose a conventional remortgage simply because it is slightly cheaper, you have no Islamic defense. Financial optimization is not a valid excuse for Riba.
Summary & Practical Guidance
- Priority 1: Islamic Refinance. Your first action must always be to check eligibility with Gatehouse, StrideUp, Pfida, or Al Rayan. Moving to them cleanses your wealth entirely.
- Priority 2: Minimize Harm. If declined by Islamic banks, remortgaging to a cheaper conventional rate is viewed by many contemporary scholars as permissible if it protects the family home and reduces Riba cash-flow.
- Strategy: Repent & Overpay. Treat the mortgage as a crisis. Do not enjoy the lower repayment. maintain your payments at the higher SVR level to pay off the capital aggressively.
Methodology
Analyzing The "Necessity" Argument
We synthesized fatwas from major bodies regarding "existing mortgages". In particular, we looked at the definition of "Darurah" in Western minority contexts and how it differs from optimal Islamic practice.
- Shaykh Haitham al-Haddad: Advice on existing mortgages and "switching".
- European Council for Fatwa and Research (ECFR): Fourth Session rulings.
- Mufti Taqi Usmani: Introduction to Islamic Finance (Sections on Darurah).