ISLAMIC MORTGAGE/FINANCING 

WHAT IS IJARA?

IJARA/IJARAH- LEASE TO OWN

 

The term Ijara literally means an acquisition or rent to own. The process is known as “Ijara-Wa-Iqtinah” and it can be used for equipment or property. The process is very simple: a single assets Trust is created, the Trust purchases the property, and then leases the property to the customer with each monthly payment, a portion of that payment goes towards ownership, until customer owns 100%.

The difference between a Sharia Ijara-Waq-Iqtinah process and a conventional mortgage is that, the Ijara process enables the Trust to obligate the seller/ owner of the property to you under a promise to purchase; same continuation entitles the customer to purchase the property.

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Lender’s requirement:

1. You need a 20% down payment, however, 5% down payment is allowed, subject to CMHC fee.

2. Clean credit history; NO bankruptcies; Beacon score required is 650+; if your score is lower, we can help you find another lender.

3. A job letter is required stating how long you have been working and your Gross Annual Pay.

4. On the basis of your gross annual income, your qualification will be established.

Procedure:

The lender will create a Trust between you and your spouse; you and your spouse will be trustees and we will be the co-trustees. We will negotiate the best rate for you, lender will prepare the documents required by Canadian Law, and you will sign all mortgage documents for the Bank. We will collect rent from the Trust and pay to the lender as required to be paid each month to make a RIBA free transaction.

The property will be registered in the name of the Trust. From day one, you will own the property, you and Trust will be responsible for property taxes and insurance. If you decide to sell the property, profit you make will be yours, no one will share any profit with you.

The contract will be for 5 years and renewable every 5 years at your choice.

A rental payment increase is also available, up to 15% as well as 15% payment at the end of each year, leading to earlier pay off. You will be responsible for all legal fees as well as land transfer tax – a legal quote is available for your estimation. If an appraisal is required you will be responsible for the fee, typically $250.00 to$300.00.

Ijara will charge $2000.00 for the creation of Trust documents. Also, $20.00 a monthly processing fee will be charged. If you have any questions or concerns, please contact:

Tariq Sultan, Realtor
Remax Dynasty Realty Inc, Markham
Office: 905-471-0002
Cell: 416-660-1515
tskrealtyinc@gmail.com 
www.torontorealestateaccess.com