Ijara: this is when the bank purchases the property you want to buy and leases it to you for a fixed term, at an agreed monthly cost. When the term is over, full ownership of the property will be transferred to you.
Musharaka: is a co-ownership agreement, where you and the bank own a separate share of the property. Each time you make a repayment, which is part capital and part rent, you buy more of the bank’s share. Consequently, your rent reduces as your share grows and, eventually, you’ll own the bank’s share of the property.
Murabaha: this is when the bank buys the property on your behalf. They then sell the property to you at a higher price. The higher price is repaid by you in equal instalments over a fixed term. For example, you may be looking to buy a house valued at £150,000, but the bank may sell the property to you for £200,000.