Seller: The current property owner who transfers the property to Barakah Mortgage for the agreed price. Once paid in full, their role ends.
Buyer: The person or family seeking a home. They receive full title and ownership of the home at closing.
Barakah Mortgage: Acquires the property from the seller, pays in full, and transfers it to the buyer at a pre-agreed Murabaha price (cost + disclosed profit). No interest, no hidden fees.
Barakah Mortgage acquires the property directly from the seller under agreed terms.
The seller receives the full price immediately from Barakah Mortgage, completing their side.
Barakah Mortgage transfers the property to the buyer at the Murabaha price. Ownership passes at closing.
The buyer pays the down payment at closing and continues predictable installments. No interest—only cost + profit.
How Does It Work?
- Separation of Contracts: The Wakala (agency) agreement between Barakah and the Buyer must be completely independent from the Murabaha sale contract. There must not be any binding commitment to the Murabaha sale before Barakah acquires the asset.
- Genuine Ownership and Risk Transfer to Barakah: Barakah, acting through its agent (the Buyer), must genuinely obtain legal and/or constructive ownership of the property before selling it to the Buyer under Murabaha. Barakah must assume all associated risks (such as loss, damage, or market changes) during its period of ownership, even if brief. The asset must truly be within Barakah’s possession and risk.
- Strict Sequencing of Contracts: The Murabaha sale contract (detailing cost and profit) can only be executed after Barakah has acquired full ownership and assumed all risks from the original seller. Before this, only a non-binding promise to purchase (wa’ad) from the Buyer to Barakah is allowed—not an enforceable sale contract.
- Transparency of Cost and Profit: The Murabaha contract must clearly state both the original cost of the asset to Barakah and the agreed profit margin.
- Permissibility of Security and Payments: Security documents may be signed and deferred payments collected, as long as they follow a valid Murabaha sale and do not introduce elements of conventional interest-bearing loans. Payments must amortize the total debt (cost plus profit) without penalties for early repayment beyond actual administrative costs. Any late payment charges must be donated to charity and cannot be additional income for Barakah.