Britain's Muslim community can now take advantage of sharia'a compliant mortgages from the UK's only totally Islamic British bank with a new Home Finance plan launched this week by Islamic Bank of Britain.
In the past, many in the Muslim community have been unable to get onto the property ladder as the only available mortgages involved interest-based transactions which are forbidden by Islamic law. Islamic Bank of Britain's new Home Finance plan is based upon the principles of partnership (Musharakah) and leasing (Ijara) which is 100% halal and fully compliant with Islamic law.
Under the new plan, homebuyers simply need to find a property and agree a purchase price with the vendor. The bank and the customer will then purchase the property together, with the bank leasing its share of the property to the customer for an agreed period of time. The customer makes a monthly rental payment to the bank, for the use of the bank's share of the property. In addition to the rental payment customers will usually make additional monthly repayments the buy out the bank's share in the property. Once the final payment has been received the property deeds are transferred to the customer.
The property will be held in the bank's name during the period of the plan with the customer holding a beneficial interest. The leasehold for the property will be held in the customer's name. The Home Finance plan is available for a maximum term of 25 years and the minimum payment from the customer is 10% of the purchase price. The plan is available to people aged over 18 who are either employed or self employed.
The plan is available for new purchases and re-financing from existing mortgages. There is a self certification option for the self employed, and landlords are offered a buy to let option too.
Ashraf Piranie, finance director of Islamic Bank of Britain explains: "Getting a foot on the property ladder has been a real struggle for many people, but for the Muslim community the problem has been compounded by the lack of Sharia'a compliant mortgage products available. In the past, many in the Muslim community had to resort to either compromising their faith or attempting to raise funds to buy outright. The new Home Finance plan will give British Muslims a real choice in line with their religious principles."
He continued: "All Islamic Bank of Britain products and services, including the Home Finance plan, are overseen and approved by our Sharia'a Supervisory Committee. The committee is comprised of world–renowned experts in the interpretation of Islamic principles and their application within modern day financial institutions."