Islamic finance is mainly made up of one or more of the following principles: Ijara, Mudaraba, Musharaka and Murabaha. These are explained under the relevant parts of the website, under Sharia mortgages for example.

Ijara is a leasing agreement where your bank buys an asset (usually your property) for you and leases (or rents) it to you over a specific period. Sometimes, depending on the scheme, you sometimes buy this asset outright at the end of the contract. Rentals paid during the period of this lease make up part of the purchase price and often, as a result, the final sale is just a small sum of money.

Mudaraba is more of an investment partnership where an investor - you -  provide the funds and an expert (Mudarib) provides the investment skill. Profits are shared between you and the mudarib, but you do risk losing your money if the investment is unsuccessful. The mudarib will not charge a handling fee unless a profit is made.

Musharaka is another form of investment partnership where all parties agree to jointly share risk and reward (losses and profits). Profit sharing terms are agreed in advance, and losses are always pegged to the amount invested by each individual and will never exceed this. For example, a bank manages the funds of depositors to generate profits that those depositors share.

Murabaha is a form of credit which allows you to make a purchase (for example a property) without having to take out an interest-charging loan. The bank buys the item for you and then sells it to you on a deferred basis (using instalments), adding an agreed profit margin.