Answered by Mufti Yusuf Mullan
Allah Most High says in the Qur’an:
“Those who swallow usury cannot rise up save as he arises whom the devil
has bewildered by (his) touch. That is because they say: Trade is just like usury;
whereas Allah permitted trading and forbidden usury. [002.275]
In the Name of Allah, Most Merciful and Compassionate. May His abundant blessing and most perfect of peace be on His Beloved Prophet, the best of creation, and his family, companions and followers,
The taking of an interest-bearing loan is a grave sin and highly impermissible [f: and one would be religiously obliged to either get out of such a situation or, when not reasonably an option, to pay it off as quickly as possible].
However, the sin incurred there from will not contaminate the ownership of the house bought through such a loan.
The ownership within the house will be considered sound and lawful. As such when the house is sold resulting in a positive gain, the seller may benefit from the entire sale price.
And Allah knows best.
Remember the words of Shaykh Muhammad Sa`id Ramadan al-Buti of Damascus, Syria, one of the greatest scholars alive:
“The necessity which allows usurious loans is the same necessity which allows eating the meat of a dead animal, pig and the like, in which case the one necessitated is exposed to perish from hunger, nakedness or losing lodging. Such is the necessity, which makes such prohibitions lawful.”
Allah Most High Himself as told us in the Qur’an,
“2.276 Allah has blighted usury and made charity fruitful. Allah loves not the impious and guilty.”
The scholars of Qur’anic interpretation, such as Imam Alusi (Allah have mercy on him) have explained ‘Allah has blighted usury,’ as meaning that Allah, “Removes all baraka (blessing) from it, and destroys the wealth of the one who enters into it.” [Alusi, Tafsir Ruh al-Ma`ani, 3.51]
Ibn Mas`ud (Allah be pleased with him) related that the Prophet (Allah bless him and give him peace) said, “Usurious money, even if much, becomes paltry in the end.” [Ahmad, Ibn Maja, and Hakim, with a rigorously authentic chain of transmission]
 As explained by Mufti Mahmoud Ashraf Usmani.
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