Murabaha
Definition of 'Murabaha'An Islamic financing structure, where an intermediary buys a property with free and clear title to it. The intermediary and prospective buyer then agree upon a sale price (including an agreed upon profit for the intermediary) that can be made through a series of installments, or as a lump sum payment. |
|
Investopedia explains 'Murabaha'Murabaha is not an interest-bearing loan, which is considered riba (or excess). Murabaha is an acceptable form of credit sale under Sharia (Islamic religious law). Similar in structure to a rent to own arrangement, the intermediary retains ownership of the property until the loan is paid in full.It is important to note that to prevent riba, the intermediary cannot be compensated in addition to the agreed upon terms of the contract. For this reason, if the buyer is late on their payments, the intermediary cannot charge any late penalties. |
Related Definitions
Articles Of Interest
-
Working With Islamic Finance
There is no division between the spiritual and the secular in this type of socially responsible investing. -
Different Needs, Different Loans
Find out what options are available when it comes to borrowing money. -
What is an Islamic investment policy?
Islamic investments are a unique form of socially responsible investments because Islam makes no division between the spiritual and the secular.The establishment of an Islamic investment policy, ... -
Do You Dare Sue Your Broker?
A financial damages claim is not for the fainthearted, but it may be worth it in the end. -
Is Relying On Home Equity For Retirement A Good Idea?
Of Americans aged 50 to 70, 47% have reported that they are relying on home equity to fund their retirements. -
Profit From Mortgage Debt With MBS
Mortgage-backed securities can offer monthly income, a fixed interest rate and even government backing. -
Are Distressed Homes Worth Buying?
Here's a look at whether it is a good idea to buy a rundown home to repair for profit. -
Advantages And Disadvantages Of Using A Mortgage Broker
Mortgage brokers may be able to find you the loan of your dreams, but you should consider the potential downsides before hiring one. -
Reasons Renting Is Better Than Buying
Owning a home is much more expensive than renting. Here are the places where the costs differ greatly. -
What To Do When You're Left Out Of A Will
Discover the legal steps you can take if you are left out of a will and if fighting is worth the effort.
Free Annual Reports