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What is a Muslim Mortgage
By David Jones
What is a Muslim Mortgage and why is it different to a normal mortgage? The Islamic mortgage market in the UK could be worth billions, a report predicted.
According to market researchers Datamonitor, demand for Islamic mortgages in the UK is so strong that gross advances could reach £4.5bn ($7bn).
Standard UK mortgage products are not suitable for Muslim customers as they are not compatible with Islamic or Sharia law. Under Islamic law, the payment or receipt of interest is expressly forbidden.To get around this and make mortgages available for Muslim customers requires a change to the book keeping and computer systems of the banks and building societies; but a number of banks and building societies have developed mortgage products specifically suitable for their Muslim customers. Under an Islamic mortgage the lender will purchase the property and then sell it on at a higher price to the customer, who will then pay back the capital over a set period of time via monthly capital payments. Alternatively, the customer could pay the lender a 'rental payment' for use of the property and then, once the agreed period of time has elapsed, ownership of the property is transferred to the customer. At present, only a handful of lenders operate in the Islamic mortgage market in the UK largely due to the complexities of these mortgage products. Some of those supplying Muslim mortgages are Lloyds TSB, HSBC Bank, West Bromwich Building Society,United Bank of Kuwait,Bank of Ireland. Any potential borrower of a Muslim mortgage should check with their local Imam, as to the conformity to law. Mortgage Brokers can state whether a mortgage is suitable from the financial point of view, but from a religious point of view as well, is too much to expect.”
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Contributor's Note
A list of all the UK Building Societies can be found at http://www.carpetbagging.co.uk/uk_building_societies_savings_rates.html
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