Buying a home with halal finance

How a murabaha works

You choose the home. The bank buys it and sells it to you at the purchase price plus a margin agreed at signing. You repay that fixed total in equal monthly instalments over the agreed duration.

There is no interest and no rate that moves. What you pay in the first month is what you pay in the last, and the total is known on day one.

Ijara, the other route

The bank buys the home and leases it to you for an agreed period, with ownership passing to you at the end. Less common for homes than the murabaha, but worth asking a bank about if the instalments suit you better.

Who offers it

Islamic banks such as Al Baraka and Al Salam, and the Islamic-finance windows the public banks have opened. Each sets its own margin, maximum duration and conditions, so the same home can cost noticeably different totals from one to the next. Compare the total, not the instalment.

What the bank will ask

Expect to be asked for:

• A down payment, often a fifth of the price or more.
• Proof of income covering the instalment.
• The sale agreement and the deed. A livret foncier makes this simple.
• A property that can be insured and registered in your name.

Estimate before you look

Our estimator models a murabaha from a price, a down payment, a margin and a duration, so you can set a maximum price before the first viewing rather than after falling for a home.