Please answer my question as it worries me quite a lot and we haven't been able to find an answer in the books we read. About four years ago we bought a house on mortgage. At that time we did not know that mortgage was Haraam. Later on when we found out we sold the house and bought another house from the profit we made by selling the house. Is that money Halaal as we made that profit by selling a mortgaged property?

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.

Since the case is as you have stated that you did not know that it is forbidden to deal with mortgage when buying the house then you are not sinful from benefiting from this house which was originally bought with a loan with interest. However, you have to be careful about dealing with usury or interest in the future.

Moreover, you have to know that you are obliged to only repay the bank with the capital money with which you bought the house and do not pay any interest. Allaah says (which means): {…but if you repent, you shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).}[2: 279].

If you still have not yet paid the whole amount to the bank, try to convince the bank managers to agree to drop the interest from you, and just repay the original loan. Because it is not permissible for you to repay the interest unless you are obliged to do so, and if you are able to repay the loan in one lump sum then that is better.

Allaah knows best.