Islamic mortgages
There are three types of Sharia-compliant mortgages. Specialist advice should be sought.
•Ijara: repayments for this plan cover payments towards capital and rent payments. The buyer will have bought out the plan provider by the end of the term and they become the sole owner.
•Murabaha: the lender buys the property and sells it to the buyer at a slightly higher price. The price depends on the property’s value, the deposit paid and the length of the mortgage. The deposit is at least 20 per cent of the purchase price. Repayments are fixed and the loan can be repaid at any time.
•Diminishing Musharaka: is a co-ownership agreement. The buyer and the bank own the property together. The buyer buys the bank’s shares in the property over time, gradually increasing their stake in the property.