Islamic Murabaha
Islamic Murabaha is a cost-plus financing structure where the bank purchases property and resells it to the client at a marked-up price payable in installments, disclosing profit explicitly while avoiding interest-based lending.
| Transaction Structure | Step 3 |
| Step 1 | Client selects property |
| Step 2 | Bank purchases property at market price |
| Step 3 | Bank resells to client at cost plus profit |
| Step 4 | Client pays in installments |
| Step 5 | Ownership transfers at contract start |
| Pricing Example | Calculation |
| Property market price | AED 2,000,000 |
| Bank purchase cost | AED 2,000,000 |
| Bank profit margin | AED 1,000,000 (over 20 years) |
| Total selling price | AED 3,000,000 |
| Monthly payment | AED 12,500 (3M / 240 months) |
| Key Characteristics | Features |
| Ownership | Transfers at contract start |
| Payment obligation | Transfers at contract start |
| Early settlement | Often allowed with rebate |
| Risk allocation | Client bears property risk |
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