Muslim Mortgage / Halal Mortgage

In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the Halal product, a Islamic Bank might purchase the Halal product itself from the seller, and re-sell it to the purchaser at a profit, while permitting the purchaser to pay the Islamic Bank in installments.

However, the fact that it is profit cannot be made explicit and therefore there are no additional charges for late payment. In order to protect itself against default, the Islamic Bank asks for strict collateral.

The goods or land is registered to the name of the purchaser from the start of the transaction. This arrangement is called Murabaha and consider Halal.