How It Works

Trade (Ijarah Model) vs Riba

الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ۚ فَمَن جَاءَهُ مَوْعِظَةٌ مِّن رَّبِّهِ فَانتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ ۖ وَمَنْ عَادَ فَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ – 2:275

Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, “Trade is [just] like interest.” But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] – those are the companions of the Fire; they will abide eternally therein.

Surah Al-Baqarah [2:275]

The Hejaz difference

Our product is structured using the Islamic Finance model known as Ijarah (Shared Equity Rental). Using this structure enables us to allow the title to the property to be held in the client’s name with the client making fixed monthly repayments. Each repayment comprises two components, a periodic charge for residing in our share of the property and a principal payment to acquire our share of equity in the property. As you acquire more equity in the property, the rental component decreases, and the equity component increases until the property is purchased outright or you sell/refinance.

Hejaz Islamic Finance

The home buyer and Hejaz Finance agree to be co-owners in the property.

Conventional Mortgages

The home buyer arranges a loan from a bank or mortgage company according to a fixed or variable interest rate

The two parties buy the home and the ownership of the property is determined by each party’s down payment.

The home buyer purchases the home.

The home buyer makes monthly payments to Hejaz Finance. Part of the payment is a periodic charge for full use of the home and the rest is a payment to increase the buyer’s ownership of the property.

The home buyer makes monthly payments to repay principal and interest on the loan.

Over the course of the arrangement, the home buyer purchases all of Hejaz Finance’s ownership stake and becomes the sole owner of the property.

Over the course of the loan, the home buyer repays the debt in full.

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