The Ijara Mortgage – "lease to own"

The Murabaha Mortgage – lender resells house to borrower

• You find a house to purchase and agree a sale price with the seller

• As with any mortgage, you then agree the amount of the mortgage with your Islamic lender- Your lender will then purchase the property outright

• You then enter into two agreements with the lender:

• You will pay back the purchase price of the property in fixed monthly instalments, usually over 25 years (like an interest mortgage).

• You will pay an agreed amount of rent each month – this provides the lender’s profit

• The rent is set annually, and decreases each year in line with your gradual repayment of the purchase price of the property

• When the purchase price has been fully repaid to the lender, ownership of the property is fully-transferred from the lender to you.