Buying/selling:
- you choose property, agree price, undertake survey
- bank enters into contract to buy the property from vendor
- bank sells property to you at higher price
- the higher price is paid by you in equal instalments over a fixed term, irrespective of what happens to Bank of England base rate
Leasing:
- choose property, agree price
- bank undertakes survey, buys property and sells it to you for the same price, in return for payments spread over fixed period up to 25 years
- in addition to monthly payments, you pay a sum for 'rent' - assessed annually in line with market trends
- you can overpay (as with a conventional flexible mortgage) to buy the house more rapidly
Replacing a conventional mortgage with a Shariah compliant one:
- bank buys property from you at current market value
- you agree to buy back the property at the same market price
- the bank pays off your interest-based mortgage
- you repay the bank in equal monthly instalments