Islamic finance windows offer two formulas to buy a home. Their monthly payments look nothing alike, and nor do their total costs.
01 Murabaha: a price fixed once and for all
The bank buys the property and resells it to you at a margin known at signature. You pay the resale price in equal instalments. Nothing moves afterwards: no interest, no review.
02 Ijara: renting to own
The bank keeps ownership of the share it finances and leases it to you. Each month you buy back a tranche and pay rent on what the bank still owns, so the first payments are the highest.
03 Against a conventional loan
At a similar rate and margin, murabaha payments look like a conventional loan’s; ijara starts higher and ends lower. The total cost depends mostly on the term and the margin.
04 The same entry rules
A minimum deposit, a maximum debt ratio, an age limit at the end of the financing: banks apply their ceilings whatever the formula. It is often the deposit that decides.
05 Simulate before you choose
Our simulator computes the three formulas side by side under each demonstration bank’s terms, and shows what limits your budget: your income, your deposit or your age.
An article by a fictional agency: general, indicative information.
