Muslim Mortgages

Mortgages available through British financial institutions have always been interest-based, something which does not comply with Islamic Sharia law, and as such are largely unacceptable to Muslims and would be against their religious principles.

Many Muslims in Britain, of which there are currently 3 million, find themselves trying to balance their Islamic principles with the realities of the British mortgage system, and often conclude they have no choice but to reluctantly take out a traditional interest based mortgage.

Sharia-complaint products currently available in the UK are based on Ijara and Murabha methods:

Ijara

• The financial institution purchases your chosen property.
• Whilst you live in their property you make payments to the financier to repay them the exact purchase price, which can be spread over up to 25 years.
• During your payment term you are also charged rent for living in the property that the financial company owns.
• Once you have repaid the money they spent on the property purchase the property is sold to you.

• The finance company purchases your chosen property from the seller at their original price, they then sell it immediately to you at a higher price.
• The amount of the higher price can be paid back monthly to the financier over a period of up to 15 years.

One of the major factors holding back the market is that stamp duty must be paid twice on Islamic mortgages, firstly by the finance company, and then by the customer.

The Council of Mortgage Lenders is urging the Government to make it simpler and cheaper to provide Sharia-compliant mortgages, as legal hurdles make existing schemes relatively expensive.

Currently only two lenders in the UK offer Sharia compliant mortgages - the United Bank of Kuwait and the West Bromwich Building Society, however now some high street finance houses, such as Citibank, HSBC and Barclays - all of which have Islamic banking arms - are looking at offering sharia-complaint mortgages, also.

West Bromwich Building Society

Through their Mortgage Service Plus, they are able to cater for the growing demand from their Muslim members, for mortgages compliant with Sharia law, confirming their commitment to the diverse communities they serve.

To find out more about Manzil mortgages through Mortgage Service Plus, please visit your local branch or call on 0121 5581015.

The United Bank Of Kuwait