What Is a Riba-Free Mortgage?
Traditional mortgage products may not suit adherents of all faiths, and riba-free mortgages are financing products that comply with Islamic banking rules. The Quran prohibits riba, which can refer to the charging of interest on a loan, so riba-free mortgages employ different structures that are certified to comply with Islamic law. For example, a riba-free mortgage may involve the bank and the buyer owning the property in tandem and ownership transferring to the buyer over time with each monthly payment. Differences between loan programs and potentially what is considered riba mean your clients will need to find an option that reflects their values. Islamic banks that specialize in riba-free mortgages exist in Texas and nationwide, and some major banks also offer financing options that comply with Islamic law.