Mortgage basics
What is the difference between Ijara and Murabaha?
Ijara is a lease-to-own structure where the bank owns the property and leases it to you, with title transferring at the end of the term. Murabaha is a cost-plus sale where the bank buys the property and immediately resells it to you at a disclosed mark-up, payable in instalments.
Structure and ownership
Under Ijara, the bank retains legal ownership throughout the lease and transfers title to you once you've completed payments, similar to a rent-to-own arrangement. Under Murabaha, ownership typically passes to you at the outset, with the bank's profit built into the agreed sale price rather than charged as ongoing rent. Both are approved structures used across UAE Islamic banks, including for non-resident applicants.
Comparing the two structures
| Feature | Ijara | Murabaha |
|---|---|---|
| Structure | Bank leases the property to you | Bank sells the property to you at a mark-up |
| Ownership | Transfers to you at the end of the term | Typically transfers to you at the start |
| Flexibility | Payments can sometimes be restructured within the lease | Fixed cost-plus schedule agreed upfront |
| Early settlement | Capped at 1% of balance or AED 10,000, whichever is lower | Capped at 1% of balance or AED 10,000, whichever is lower |
Which one banks tend to offer
Most UAE Islamic banks offer Ijara as their primary home finance product, with Murabaha more commonly used for shorter-term or specific transactions. The choice is usually set by the bank's product range rather than something you select independently, though some banks offer both.
Typical use cases
- Ijara: standard residential home finance over 20-25 years, including for non-residents
- Murabaha: shorter-term finance or specific asset purchases where a fixed cost-plus schedule suits the transaction
- Both: available from Islamic banks to residents and non-residents, and to buyers of any faith
Whichever structure your chosen bank offers, the practical experience — monthly payments, documentation and the DBR affordability check for salaried residents — closely mirrors a conventional mortgage. See is an Islamic mortgage more expensive for how the two compare on cost, and can non-Muslims take an Islamic mortgage for eligibility.
Run the numbers on your own case
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Last reviewed 18 July 2026