Murahaba is an installment-based financing model. It operates on the principle of cost-plus profit, where the seller discloses the cost of the asset and adds a known profit margin.
In a Murahaba agreement, the buyer and seller agree on the marked-up price, and the buyer pays this amount in installments over a specified period. This method not only provides transparency but also ensures that both parties are aware of the profit involved, fostering trust and mutual benefit.
At closing, you will provide us with the down payment. The balance of the Murabaha debt will be paid in installments as agreed. You will have the title/ownership to the property at closing.
By structuring the transactions in this Islamic manner, we avoid lending you the money and therefore there is no interest involved. At closing, you do not sign a promissory note that states the rate of interest at which you are borrowing. Instead, you will be signing a Murabaha contract for the balance amount due and monthly installment payments for the home.
Mubarak Mortgage uses financial transactions compliant with Islamic values that meet US and other applicable regulatory standards. The contracts and processes are free from riba, which is “interest” in the traditional banking context.