Sharia-compliant mortgages are common in Islamic finance core countries and increasingly common in other countries. There is also potential scope for Sharia-compliant securitizations, backed by these arrangements. Here, S&P Global Ratings presents responses to frequently asked questions from market participants. In the appendix, we set out the main features of Sharia-compliant mortgages in the U.K. and Saudi Arabia. This article exclusively covers high-level risks that are common among Sharia-compliant mortgages and Sharia-compliant residential mortgage-backed securities (RMBS) structures. Other risks may exist and may differ by jurisdiction. To answer this, we must take a step back to explain how conventional mortgages--in this case, mortgages that are not Sharia-compliant--work. A conventional mortgage provider typically charges interest. A property purchase through a conventional
