What It Means
Ijarah is an Islamic finance structure in which the bank purchases the property and leases it to you; at the end of the term, ownership is transferred to you.
Why It Matters
It is one of the Sharia-compliant alternatives to a conventional interest-based mortgage. Instead of interest, the arrangement is based on leasing, with terms disclosed up front. Availability and structuring vary by Islamic bank.
Simple Example
Under an Ijarah home finance arrangement, you make agreed monthly payments as the lessee and take ownership at the end of the term, per the contract terms.
Related Terms
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