Islamic mortgages

Islamic mortgages comply with Shariah law, which prohibits interest (riba). Instead of paying interest, the bank and borrower enter into a trade-based agreement, such as Ijara (lease) or Murabaha (cost-plus sale). In Ijara, the bank buys the property and leases it to the borrower, who gradually makes payments until ownership transfers. Murabaha involves the bank purchasing the property and selling it to the borrower at a marked-up price, paid in installments. These structures avoid interest, emphasizing asset-backed financing and ethical ownership, aligning with Islamic principles while enabling homeownership.