Spot the structure

Ten short descriptions of how an Islamic home finance deal works. Pick the structure each one describes: diminishing musharaka, ijara or murabaha. Every answer comes with the line that explains it, from our guide to how Islamic mortgages work.

The three structures in one line each

Diminishing musharaka: you and the provider own the home together, and you buy its share over time.
Ijara: the provider owns the home and leases it to you, and the contract sets out how it passes to you.
Murabaha: a sale at a disclosed cost plus a disclosed profit, paid in instalments. In the commodity form, also called tawarruq, you own the home from day one.

Diminishing musharaka and ijara are usually regulated home purchase plans. Commodity murabaha sits under the mortgage rules. Which structure a provider uses, and who approved it, is on each provider’s page in our provider register.

See all ten, with the answers

You and the provider buy the home together, as co-owners. Each month you buy a little more of its share. Diminishing musharaka. Co-owners whose shares change hands over time: that is diminishing musharaka.
The provider owns the whole home and leases it to you. The contract sets out how the home passes to you. Ijara. The provider owns, you rent, and the contract sets the transfer: that is ijara, a lease to own.
The provider buys the home and sells it on to you at a higher price, disclosed up front, paid in instalments. Murabaha. A sale at a disclosed cost plus a disclosed profit: that is property murabaha.
The provider sells you metals at a marked-up price, paid over time. The metals are sold on, and you buy the home with the cash. Murabaha. That is commodity murabaha, also called tawarruq.
Your deposit becomes your first share of the home, and your share grows every month until the home is all yours. Diminishing musharaka. A growing share bought from a co-owner: diminishing musharaka.
You own the home from day one, and the provider takes a charge over it. Murabaha. Of the three, only commodity murabaha leaves the home yours from the start.
You pay rent to live in a home the provider owns, and the home passes to you at the end of the term. Ijara. Rent to the owner, with ownership passing at the end: ijara.
The price you will pay is fixed at the start: what the provider paid, plus a profit it tells you about. Murabaha. A disclosed cost plus a disclosed profit is the mark of murabaha.
Two owners on day one. The provider’s share shrinks and yours grows until the home is all yours. Diminishing musharaka. A shrinking partnership is what diminishing musharaka means.
You live in the home as the provider’s tenant, and the contract says when ownership passes to you. Ijara. A tenancy with a transfer written into it: ijara.

Independent research, not financial advice. This quiz describes how the structures work; it does not say whether any product is permissible.

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