Original question: The general consensus from scholars has been that taking up a mortgage loan on the first house is permissible. What is the permissibility of upgrading our home for the sake of asset progression and as part of our retirement plan, given that we will have to take up a bigger loan? Or if we need a bigger place to house our family?

Answer:

Islam provides guidance on various aspects of our worldly lives, both spiritually and materially, including our financial affairs. The desire for a better life and prosperity is innate to humans, but in Islamic teachings, it’s the means and intentions that hold paramount importance. This is highlighted in Surah Ali ‘Imran, verse 14: “It has been made attractive for people to love the desired things; that is, women, children, hoarded heaps of gold and silver, branded horses, cattle, and tillage. That is an enjoyment of the worldly life; but with Allah lies the beauty of the final resort.”

When discussing financial growth, Islam segments it into four key stages: 

1. Wealth accumulation: This involves the process of progressively increasing assets through permissible means. This not only encompasses the acquisition of tangible assets like a house or car but also emphasizes the importance of ethical wealth generation.
2. Wealth protection: Protecting one’s assets doesn’t just mean safeguarding against theft or damage but also ensuring that one’s assets aren’t eroded through impermissible means like usurious practices.
3. Wealth purification: This aspect emphasizes the importance of charitable actions, like giving zakat (alms) and sadaqah (voluntary charity). It’s about ensuring that a part of your wealth benefits those less fortunate, ensuring community cohesion and lessening disparities. 
4. Wealth distribution: This involves bequests and inheritances, making sure that one’s assets are distributed justly and in accordance with Islamic principles upon their passing.

Now, let’s understand asset progression in this framework. As humans, we have needs that evolve over time. The Maqasid al-Shariah (Ultimate objectives of Shariah) beautifully categorizes our needs into:

1. Daruriyyat (Necessities): These are the fundamental requirements for survival and dignity, such as basic shelter, food, and clothing.
2. Hajiyyat (Complementaries): Once the basic necessities are covered, one moves to this stage, which offers a more comfortable lifestyle but steers clear of extravagance.
3. Tahsiniyyat (Embellishments): These are luxuries, not necessary for life but add additional comfort and aesthetics. 

Obtaining a mortgage for one’s initial residence is usually seen as meeting the “Daruriyyat”. But as our families grow or as we desire to enhance our living conditions, the lines between necessity, comfort, and luxury can blur. 

This is where introspection, guided by Islamic principles, becomes crucial. Before considering the transition from one stage to another, especially when it involves financial obligations, one must reflect deeply on their motivations, intentions, and the broader implications of their decisions. 

In a place like Singapore, where Islamic mortgage options are limited, the decision to upgrade, potentially binding oneself to a larger interest-bearing loan, warrants even more consideration. Riba, or interest, is unequivocally prohibited in Islam due to its exploitative nature and its potential to lead to severe social inequalities. Thus, even if asset progression might seem like a sound financial decision on the surface, one must weigh it against the spiritual costs and the potential entrapment in interest-based debts. 

However, life is not black and white, and neither are the circumstances of each individual. For instance, if a family outgrows their current living space due to additional members, the move to a larger home through interest-based financing can be seen as a genuine necessity rather than a mere desire for luxury. 

On the other hand, if someone already living comfortably wishes to move to a posher locality through interest-based financing, solely for prestige or as a status symbol, it would be harder to justify such a move from an Islamic perspective. 

A balanced approach might involve exploring alternative housing solutions, like renting a larger space instead of purchasing one through interest-based debt, or considering other ways of investing one’s money in halal ventures that provide both worldly returns and spiritual contentment. 

Ultimately, the relationship between a believer and wealth in Islam is profound. Wealth isn’t just currency or assets; it’s a trust from Allah. And with this trust comes responsibility. Every decision, especially those involving significant financial implications, should be taken with both the worldly and the hereafter in mind. 

As believers, it’s imperative to remember the transient nature of this world and the eternal implications of our choices. The hadith narrated by Ka’ab bin ‘Iyad (RA) is a sobering reminder: “Indeed there is a fitnah for every Ummah, and the Fitnah for my Ummah is wealth.” (Jami’at-Tirmidhi, hadith no. 2336). 

May Allah bless us with clarity, wisdom, and righteousness in all our endeavors. 

Allah Knows Best.