The British Government made it possible by working with banks to introduce Shariah compliant Islamic Mortgages.
Bond Adams look at the UK market. There are a number of banks in the UK that offer Islamic finance products to their clients. Here Bond Adams Solicitors from their Birmingham office, look at the offering. These banks include:
Al-Buraq by Arab Banking Corporation, which is also available through Lloyds TSB (underwritten by Bristol & West).
Manzil with Ahli United Bank
Home Purchase Plan with The Islamic Bank of Britain (Now called the Al Rayan Bank)
ABT Finance with RBS
United National Bank
Al Hilal Islamic Bank of UAE Products
Gatehouse Islamic finance
Different types of Islamic Mortgages available
Shariah compliant mortgages, are structured so that the bank or lending institution still make money, but not in the form of interest. The bank or lender will make money as profit or through charging rent when the bank or lender owns the property or asset and having a solicitors firm knowledgeable is key. The 3 types of Shariah compliant Islamic mortgage are:
Murabaha – The Bank will buy the property and will sell it back to you on a deferred basis.
Musharaka (also known as ‘diminishing Musharaka’) – The Bank will buy the property and grant you a lease. A Trust is created between you and the Lender. With each payment your share in the property will increase until you have bought all the shares in the property. The Lender will then transfer the legal title into your name. This is the most popular form of Islamic finance today.
Ijara – The Lender will buy the property and grant you a lease for a term. Once the lease period is completed the Lender transfers the legal title of your new home to you.
Please Note: Islamic mortgages offer an alternative financing structure for muslims and people that require a Shariah compliant mortgage. It is not a 0% free deal to buy your house for nothing.
We act for clients across the world on these and other finance matters.
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