Understanding Sharia Compliant Mortgages in UAE

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Holo Team


Sharia compliant mortgages, often referred to as "home financing" or "Sharia compliant home finance," adhere to Sharia principles and comply with Islamic law. The fundamental difference between Sharia compliant mortgages and conventional mortgages lies in the prohibition of Riba (usury or interest) in Islamic finance. Instead, a Sharia compliant mortgage loan operates on the principle of profit and risk-sharing.

Key Concepts in Sharia Compliant Mortgages

  1. Murabaha: One of the most common structures for Sharia compliant home financing, Murabaha, involves the bank purchasing the property on behalf of the customer and then selling it to the customer at an agreed-upon markup, which can be paid over an extended period.
  2. Ijara (Lease to Own): In an Ijarah-based mortgage, the bank purchases the property and leases it to the customer. The customer makes periodic lease payments, with a portion of each payment going toward the purchase price. Over time, the customer becomes the owner of the property.
  3. Musharaka: This is a form of partnership where both the bank and the customer contribute to the purchase of the property. The customer and the bank share both the costs and risks. Over time, the customer buys out the bank's share, eventually becoming the sole owner.

Benefits of Sharia Compliant Mortgages

  1. Sharia-Compliance: Sharia compliant mortgages are designed to be in line with Islamic principles, ensuring that they do not involve interest (Riba).
  2. Asset Ownership: With Sharia compliant mortgages, you are not just paying off a debt; you are investing in the property from day one. This means you are building equity and ownership right from the start.
  3. Shared Risk: Sharia compliant banks and customers share in the risks and rewards associated with the property, creating a more equitable financial relationship.

Considerations for Sharia Compliant Mortgages

  1. Eligibility: Sharia compliant mortgages are often offered to UAE residents with specific eligibility criteria. Ensure you meet these requirements before applying.
  2. Property Selection: Choose a property that is eligible for Sharia compliant financing, as not all properties may be compatible with Sharia compliant home financing structures.
  3. Legal Documentation: Ensure that all legal documentation, including the financing agreement, is reviewed by a qualified Sharia scholar or advisor to confirm its compliance with Islamic principles.
  4. Profit Rates: Compare profit rates from different Sharia compliant banks. Like interest rates in conventional mortgages, profit rates in Sharia compliant mortgages can vary.
  5. Get a mortgage broker in UAE: Work with a mortgage advisor to explore the Islamic mortgage market for you. They will be able to give you impartial advice on the best rates in the market before you make your application for a mortgage in UAE.


Sharia compliant mortgages offer a Sharia-compliant and ethical approach to home financing in the UAE. With various structures and benefits like shared risk and asset ownership, they provide a viable alternative to conventional mortgages for Muslims seeking to own homes while adhering to their religious beliefs. When considering a Sharia compliant mortgage, it's essential to conduct thorough research, consult with experts, and choose a structure that aligns with your financial goals and values.

If you're looking for a mortgage in the UAE, working with Holo's mortgage specialists is free. Our digital mortgage services include an online mortgage application that will search the market for the best Sharia compliant and conventional mortgage products for you in just two minutes. Use our UAE home loan calculator to calculate your monthly repayments and affordability and speak to our experts who will answer all your mortgage FAQs!

Start exploring your options today!