Question Summary:
Will my actions and ibādah be valid in a house which I bought using an interest-bearing bank loan?

Question Detail:

Assalaamu `alaykum waRahmatullahi Wabarakatuh, this question relates to buying a house on interest in a western country. While reading the rulings on this website, it is clear that home loans taken by a western banking institution (which deals in interest) is not permissible. My question however, if one does buy a home on interest, will all their actions while staying in their home will be haram as well? The above is my assumption as I thought if you live in a house which is haram than all your actions within it would be looked upon the same, as haram. What would be the ruling of making Ibada in house bought with interest, will that be accepted? Wasalaam, AH

Answer :

In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
Receiving an interest-bearing loan from the bank is a great sin.
Ḥaḍrat Jābir Radiyallahu ‘Anhu said:
لَعَنَ رَسُوْلُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ آكِلَ الرِّبَا وَمُوْكِلَهُ وَكَاتِبَهُ وَشَاهِدَيْهِ  
 “The Messenger of Allah Ṣallallāhu ‘Alayhi Wasallam cursed the one who consumes usury (ribā), the one who provides it, the one who writes it, and the [two] individuals who witness it”[1]
You should make a committed effort to repay the debt immediately and continue seeking repentance until the debt is paid off.[2]
 
Nonetheless, receiving an interest-bearing loan and the purchase of a house are considered two separate transactions. Accordingly, your actions and ibādah in the house shall be valid.[3]
 
And Allah Ta’āla Knows Best
Mu’ādh Chati
Student Darul Iftaa
Blackburn, England, UK
Checked and Approved by,
Mufti Ebrahim Desai.