Shari'ah mortgages
This content applies to England only.
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Shari'ah mortgages are designed to comply with Shari'ah (Islamic religious law). They do not involve any interest payments, which is not allowed under Islamic law.
The most common forms of Shari'ah mortgage are Murabaha and Ijara.
Ijara
ljara is a leasing agreement where you arrange for the bank to buy a home, and you then make payments to the bank as rent and instalments of the purchase price.
When all instalments have been paid, the home is transferred to you.
Murabaha
Murabaha is a form of mortgage transaction where the bank buys the home and sells it to you at a higher price to include the bank’s profit, again to be paid by instalments. The bank retains a mortgage until all instalments have been paid.
