Do I need to pay Zakat if I have a mortgage?

Short Answer:

If, after deducting your outstanding mortgage payments, your zakatable assets still exceed the nisab threshold, you are required to pay Zakat. Otherwise, you are exempt. However, scholars differ on how much of a long-term mortgage should be deducted when calculating Zakat.

Long Answer:

Debts impact your Zakat obligation, but the extent to which they reduce your zakatable wealth depends on the type and duration of the debt. While short-term debts (due within a year) are generally deducted in full, long-term debts such as mortgages and student loans have varying rulings depending on scholarly opinions.

Short-Term Debts (Due Within a Year)

Most scholars agree that debts payable within the next 12 months—including mortgage payments due this year—can be deducted from your assets before determining if you meet the nisab threshold.

Long-Term Debts

For long-term debts, such as a mortgage or student loan that will be repaid over several years or decades, scholars have different views on how much should be deducted when calculating Zakat:

1. Deduct Only the Next 12 Months’ Payments – Some scholars argue that only the portion of your debt due in the next year should be deducted. This approach prevents over-exemption, as long-term debts are often significant but are repaid gradually over time.
2. Deduct the Entire Debt – Others believe that the full outstanding loan amount can be deducted, as it represents a financial liability.

This difference in opinion significantly impacts whether you qualify to pay Zakat or not.

Applying These Rulings to Mortgages

Since mortgages are one of the largest long-term debts people carry, their treatment in Zakat calculations is crucial.

Example 1: Deducting Only the Next 12 Months’ Payments

• Total Savings & Investments: £15,000
• Mortgage Payments Due This Year: £5,000
• Total Outstanding Mortgage Debt: £200,000

Zakat Calculation:

£15,000 (assets) - £5,000 (this year’s mortgage payments) = £10,000

If £10,000 is above the nisab threshold, you must pay Zakat.

Example 2: Deducting the Entire Mortgage Debt

• Total Savings & Investments: £15,000
• Total Outstanding Mortgage Debt: £200,000

Zakat Calculation:

£15,000 (assets) - £200,000 (total mortgage) = -£185,000

Since your liabilities exceed your assets, you would be exempt from paying Zakat.

Which Opinion Should You Follow?

Most scholars recommend not deducting the full mortgage amount, as it is a long-term debt repaid gradually. Instead, they suggest only deducting the next year’s mortgage payments, similar to how student loan repayments are treated in Zakat calculations.

This approach ensures that individuals with large debts still fulfill their Zakat obligations if they have significant savings and assets beyond their immediate financial responsibilities.

What Should You Do?

1. If you have a mortgage, most scholars advise deducting only the upcoming year’s payments before determining your Zakat obligation.
2. If you follow the opinion that allows deducting the full debt, you may find yourself exempt from Zakat entirely.
3. For student loans, the same rulings generally apply—only the next year’s repayment should be deducted.
4. Consult a scholar if you are unsure which ruling best applies to your situation.

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