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Pharos is pleased to present the market leading and 100% Halal Pharos Home Purchase Plan. Pharos Home Purchase Plan has been approved by the Pharos Sharia Committee. It is available to Muslim and non-Muslim customers as an alternative to a conventional interest-bearing (and therefore, Haram) mortgage.

How does it work?

Described simply, both you and Pharos will each contribute towards the purchase of the home. For example, Pharos may contribute 75% and you 25% of the purchase price. Both you and Pharos will become partners. Over a period of up to 25 years (as an example), you will make monthly purchase installments through which you will buy Pharos’ share. With each installment paid, Pharos’ share in the property diminishes while your share correspondingly increases.

Each monthly payment will consist of two elements:

  • Rent element – this is the amount that you are paying to Pharos as rent on Pharos’ share of the property.
    This is covered by the Ijara (lease) agreement.
  • Acquisition element - this is the amount that you are contributing towards purchasing Pharos’ share in the property.
    This is covered by the Diminishing-Musharaka (partnership) Agreement.
The rent element most probably decreases at each term of the mortgage review as Pharos’ share in the property decreases with each
acquisition payment.

Benefits of the Pharos Home Purchase Plan:

  • Purchase your home in a Sharia compliant manner and totally interest free
  • Utilize a 100% Halal product with features and cost at par with a bank’s interest based mortgage
  • Convert your existing interest based mortgage to Sharia compliant finance
  • Raise additional finance in a Sharia compliant manner
  • Sell your property at any time
  • Benefit 100% from any price appreciation in the value of your home*
* If you choose the option to be fully responsible for both Appreciation and Depreciation.

Key differences between a Halal Sharia compliant finance and a conventional mortgage.

Pharos’ Sharia compliant finance
Banks’ Interest based mortgage
The client is a tenant of Pharos and will pay rent on the occupied share of the property.
The client is a borrower paying interest on the loan received from the bank.
The term of the contract and monthly payments are fixed and do not change according to Sharia financing.
The monthly payments fluctuate according to the changes in the interest rate.
The income for Pharos is from the rent charged to the client for using the property.
The income for the bank is from charging interest on the loan advanced to the client.
Pharos as a partner in the property will be subject to the risks associated with ownership of the property.
The bank as a lender will not have exposure to any ownership risks.
Pharos will be the holder of the legal title but the customer will have the beneficial interest of the property and the title of the leasehold.
The client is the legal title holder.

• The rent rate is fixed for the each term of the mortgage.
• The Ijara (lease) Agreement will explain the details of the terms as well as rent amount.
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