Murabaha is an Islamic finance structure based on a cost-plus sale. The bank buys the asset and sells it to the customer at a disclosed mark-up, payable in instalments — a Sharia-compliant way to finance a purchase without charging interest.
Where you’ll see it
You’ll see Murabaha used in Islamic property and asset finance. The bank acquires the property and resells it to the customer at an agreed total price (cost plus profit), which the customer repays over time.
Why it matters
The mark-up in a Murabaha is fixed and disclosed upfront, giving predictable total cost. For buyers needing Sharia-compliant finance, understanding that the profit is a sale mark-up not interest and that it is typically fixed, helps them compare it with Ijarah and conventional loans.
What it is not
Murabaha is not an interest-based loan, and it differs from Ijarah, which is lease-based. In Murabaha the customer typically owns the asset from the outset, repaying the agreed sale price.
Example
An Islamic bank buys a property and sells it to the customer at cost plus an agreed profit; the customer repays that total in instalments, with the price fixed at the start.
Connected documents and parties
Murabaha sale agreement, payment schedule; buyer, Islamic bank, DLD.
Going deeper: related reading: Ijarah.
Related Terms
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Last reviewed: June 2026