Yes, it is entirely possible to switch from a conventional interest-bearing mortgage to a fully Shariah-compliant structure. This process involves replacing your current conventional arrangement with an alternative finance product.
Depending on whether the property is residential or commercial, your main options typically include:
- Diminishing Musharakah (Co-Ownership): This model is commonly used for residential properties. You and the financier own the property jointly. Over time, you gradually buy out the financier’s share while paying a rental fee for the portion you do not yet own, eventually achieving full ownership.
- Commodity Murabaha (Cost-Plus Profit): Often utilised for commercial finance or specific structures, where the financier purchases a commodity and sells it to you at a deferred, agreed cost-plus-profit price.
Key Considerations Before Making the Switch:
- Early Redemption Charges (ERCs): Check if your current conventional lender charges a penalty for leaving your current term early. Obviously from a shariah point of view we would say you need to switch at all cost.
- Eligibility & Criteria: Our team will review your property type, value, and personal financial circumstances to find the most suitable structure with our panel of alternative finance providers.
As every situation is unique, we recommend arranging a consultation to explore your options in detail.
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