| Islamic Mortgage |
Conventional Mortgage |
| These are interest free and are called Murabaha, deferred sale agreement and Ijara, lease to own. |
Funds are borrowed from the lender and interest is charged for the duration of the loan. |
| Sources of income and credit references for the loan can be re-examined before retirement age. |
Sources of income and credit references for the loan can be re-examined before a 65th birthday |
| The property's value must be at least £50,000. |
Most lenders have no lower limit on the property's value. |
| Life and building insurance is not compulsory. |
Life and building insurance will be compulsory in most cases. |
| The bank owns the property immediately. |
The borrower owns the property not the lender. |
| Payment terms for the Murabaha is a minimum of 5 years and a maximum of 15 years. The Ijara has a minimum of 7.5 years and a maximum of 25 years. |
Payment terms can be up to 40 years. |
| Funds available for a Murabaha are up to 2.5 time the annual income. For an Ijara its up to 3 times the annual income of the sole applicant. |
The amount borrowed can be up to 5 times of the sole applicant. |
| An arrangement fee of 0.75% is payable on the property's value after the first payment. |
An arrangement |
