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Ijara vs Musharakah, lease-to-own vs partnership.
Two of the three primary halal mortgage structures. Both are permissible; both spread acquisition over time. The difference is who owns what during the term.
Dimension
Ijara wa Iqtina
Musharakah (Diminishing)
Ownership during term
Financier owns the home; buyer rents
Financier and buyer co-own from day one
Ownership at end
Transferred to buyer via separate sale
Buyer owns 100% after final buyout
Risk during term
Financier bears as owner
Shared in proportion to ownership share
Payment composition
Rent + acquisition payment
Rent on financier share + buyout payment
AAOIFI standard
No. 9 (Ijara and Ijara Muntahia Bittamleek)
No. 12 (Musharakah)
Best for
Buyers who prefer financier-as-landlord during term
Buyers who want immediate co-ownership
Verdict
Where each structure wins.
Both structures work. Musharakah is often preferred where states have favorable co-ownership tax treatment; Ijara works in states where the documentation is cleaner under local property law. Provider selection often drives the choice more than buyer preference.
Verdict above is editorial. A Mufti Saad signed verdict replaces this when corpus content covers the comparison.
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