Convert to a Riba-Free Home Loan Alternative

A conversion essentially changes the nature of the transaction from a rent on money transaction (Riba) to a rent on property (Ijara) transaction. There is a loophole in all mortgage transactions that we take advantage of, as long as we do not change the economics of the transaction, we can change the nature of it. Once you have gained 100% equity, the property can be transferred to your name, or you could also opt to keep it in the trust. If the property is still in the trust, you still have the same rights as a regular homeowner since you are the grantor and beneficiary of the trust. So you can sell, rent, renovate etc., as you please.

Economically, you will be paying the same but the structure of the transaction will be different. The property is owned by the trust and leased to you. Ijara will manage the collection and processing of payment as rent from you to the trust. Since you are the grantor of the trust, you would have the full authority if you want to sell/rent / renovate/ etc. the house at any. The bank will remain the investor, but you will no longer be paying interest. After the conversion, the transaction will be restructured into a rent to own transaction between you and the trust. The bank will be the investor in the trust. The bank will be investing into your property and they will be gaining their profit through the rent, they will no longer be receiving their profit as a rent on money (Riba).

You don’t have to go through a tedious process of refinancing; no credit check, appraisal, or income documentation needed. The entire process of the conversion will take approx. 10-14 business days, after which you will be in a Sharia Compliant Ijara™ transaction.