Salaam, this is Amin Islam and I have a question regarding co-signing a loan. Is it permissible for me to cosign a loan for a family member to purchase a home through a bank that deals with interest? I have advised my family member and he is aware and would still like to move forward with the loan. We have tried using an Islamic bank but it was denied due to the appraisal condition. I would not be paying the loan nor would I make any money off the rental income. All I am doing is putting my name on the loan because my family member does not make enough yearly. Is there still fault on and is this still prohibited?
When you co-sign on a loan then you legally become a partner in that agreement. If you co-sign with the family member then you are equally responsible for the repayment of that loan under the law and bear the responsibility.
Therefore, you should avoid becoming a co-signer on an interest based loan as much as possible.
And Allah knows best.
Mufti Ikram ul Haq
Fatwa Center of America