Long-Term Debts and Mortgages

They are spread over many years. A mortgage or student loan is not an immediate obligation. You repay it gradually over 10, 20, or even 30 years. At any given time, only a small portion is due. For this reason, most scholars do not allow you to deduct the full amount when calculating Zakat. For example, if you have a £150,000 mortgage but only £6,000 in payments are due this year, you can only deduct the £6,000, not the full £150,000.

Only deduct the amount due in the next 12 months. On your Zakat date, check how much you will pay toward your mortgage in the next lunar year. This includes both principal and interest (though paying interest is haram, the debt itself still exists). Deduct only this amount from your zakatable wealth. Many people mistakenly deduct their entire mortgage, thinking it reduces their Zakat significantly. This is incorrect and leads to underpaying Zakat. The reasoning is simple: you are not required to pay the full mortgage immediately, so it is not an immediate debt.

Most scholars say student loans cannot be deducted. Student loans in the UK (and similar systems worldwide) are repaid based on income, not as a fixed obligation. If you do not earn above a certain threshold, you do not pay anything. For this reason, many scholars say student loans are not genuine debts that reduce your wealth. Additionally, student loans are very long-term (often 30+ years) and may be written off eventually. This makes them different from a loan you must repay in full. The safest approach is to not deduct student loans when calculating Zakat. warning A Common Mistake