Islamic Finance Tool
Islamic Mortgage Comparison
Compare Murabaha (cost-plus sale) and Ijara (lease-to-own) against a conventional interest mortgage. Enter the property price, your down payment and the term, then adjust each structure's rate to match the offers you have been quoted.
Property Details
Slide between 10% and 50% of the property price.
Financed amount: $0.00 over 15 years (180 payments)
Conventional Mortgage
Based on conventional interest (riba)
- Monthly payment
- $0.00
- Total paid over the term
- $0.00
- Total interest paid
- $0.00
Murabaha (Cost-Plus Financing)
The bank buys the property and sells it to you at an agreed markup, paid in instalments. No interest — the profit margin is fixed upfront.
Total markup over the whole term, not per year. Providers quoting a yearly margin: multiply it by the number of years.
- Monthly payment
- $0.00
- Total amount paid
- $0.00
- Total markup paid
- $0.00
Ijara (Lease-to-Own)
The bank buys the property and leases it to you. A portion of each payment goes toward ownership, so you gradually buy the bank's share.
Charged each month on the share the bank still owns.
Share of the property that becomes yours each year.
- Estimated monthly payment (first month)
- $0.00
- Total paid
- $0.00
- Full ownership reached
- Not within 50 years at this transfer rate
Comparison Results
Total cost compared
Islamic financing avoids riba (interest), which is prohibited in Islam. While the total cost may be similar or higher, the structure is Sharia-compliant.
Understanding Islamic Mortgages
Why conventional mortgages are avoided. A conventional mortgage charges interest (riba) on a loan of money. Riba is explicitly prohibited in the Qur'an (2:275–279), so the structure itself — not just the cost — is the problem. Islamic finance instead builds the transaction around a real asset: a sale, a lease, or a partnership.
Murabaha — cost-plus sale. The bank buys the property and immediately resells it to you at a price that includes an agreed profit margin, payable in fixed instalments. Pros: the total price is fixed from day one, so payments never change. Cons: early settlement rarely reduces the agreed price much, the deposit required is often larger, and some structures resemble a loan closely enough that scholars scrutinise the paperwork.
Ijara — lease-to-own. The bank owns the property and leases it to you. Each payment combines rent for the bank's share with a purchase of part of that share, so your ownership grows and the rent portion shrinks. Pros: clear asset ownership, and rent is only charged on what the bank still owns. Cons: the rent is usually reviewed periodically, so payments can change, and you are a tenant until the final transfer.
Diminishing Musharaka. A third widely used model: you and the bank co-own the property as partners, you pay rent on the bank's portion, and you buy out its shares over time until you own it outright. Many providers market this as their main home-finance product.
Finding a provider. Look for Islamic banks and home-finance companies serving your country, ask your local mosque or Muslim community organisation for recommendations, and check that the provider publishes a Sharia supervisory board and its fatwa for the specific product. Compare the total amount payable, the deposit, early-settlement terms and any fees — not only the headline rate.
This tool provides estimates only and is not financial advice. Contract terms vary between providers, and scholars differ on how particular structures are implemented. Consult a qualified scholar and a licensed financial adviser before signing any financing agreement.