A home purchase plan is a Shariah-compliant mortgage alternative. Gatehouse has also amended rates on its Buy-to-Let (BTL) range for UK residents, UK Expats and International residents. It will take only 2 minutes to fill in. Don’t include personal or financial information like your National Insurance number or credit card details. 43.2% earn between £20,000 and £50,000, compared to the 39.5% of all UK adults. For anyone who needs to avoid interest. An Islamic mortgage / halal mortgage / home purchase plan is a financial product designed to help Muslims purchase property without borrowing money. It is against Islamic law to receive or pay interest, which has traditionally been a big problem for Muslims living in the UK, as it meant that only the very wealthy were able to buy homes because they had the ability to purchase properties outright. Islamic mortgages have been in the mainstream market in the UK for some years but it can often be difficult to get to grips with sharia-compliant financial products, which can seem confusing. Islamic mortgages also involve more, and more complex, legal transactions. We’ll send you a link to a feedback form. Banking you can believe in. In the UK Islamic mortgages are more expensive than conventional mortgages. And this is no different for Islamic mortgages. Luckily for … Many families choose to rent for the long-term rather than participate in a bank loan which involves the taking or paying of interest. Under Shariah finance principles, money must be put to a good use to generate profit supported by genuine trade or a business related activity. Which Banks provide Islamic Mortgages in the UK in 2020? In a UK or US context, domestic law can be used for Islamic finance without importing Shariah into the legal system. You’ve accepted all cookies. For UK residents, the 2 Year Fixed and 5 Year Fixed BTL products have seen their rates rise 0.5% to … It also eased lending restrictions on and oversaw the introduction of two new financial products, Islamic student and start-up loans. Our Islamic home finance facility (Islamic Buy to Let Purchase Plan), is built upon morally-binding promises between the customer (you) and the investor (UBL UK) under the principle of Diminishing Musharaka. 1982. From today the rules have been amended to enable banks that sell HPPs to purchase a government guarantee for them. You can change your cookie settings at any time. This will be particularly supportive to some Muslim homebuyers who have been unwilling to use a traditional Help to Buy mortgage because of their religious beliefs. Interest payment is prohibited– “All types of intrigue are riba and henceforth restricted”. 1.Al Rayan Bank (previously Islamic Bank of Britain). (£399 IBB admin fee). Among the three main types of purchase plan covered here, there are lots of individual no-interest products available, so … HSBC’s total UK mortgage portfolio is in excess of £70bn. The two main types of Islamic mortgage available in Britain are Murabaha and Ijara. 1996. We use cookies to collect information about how you use GOV.UK. We use this information to make the website work as well as possible and improve government services. We currently provide tailored home finance solutions for clients based in the UK or overseas, in accordance with Islamic Shari’ah, looking to purchase a property for private residence or … Al Rayan Bank are the biggest and earliest Islamic bank. Islamic mortgages are designed to achieve the same economic results while complying with Shariah. If you’re looking for an Islamic mortgage, one which is halal (lawful), you can apply for one through a specialist provider. The Help to Buy extension builds on the government’s commitment to support the UK Islamic finance market, worth around £11 billion each year, and retain London’s position as the premier western Islamic financial centre. What is an Islamic Mortgage? The following banks and brokerage institutions offer Islamic, or no riba', home mortgages which are compliant with Islamic law. The first is a rent-to-own structure (ljara) where the property is purchased by a trust and the borrower is listed as grantor, trustee, and beneficiary. Under this structure, the purchaser and Islamic bank will be purchasing the property jointly. Islamic mortgages have become a niche proposition since high street names HSBC and Lloyds Bank left the market more than five years ago, but … Al Rayan Bank has the widest range of Islamic mortgage alternatives in the UK. Don’t worry we won’t send you spam or share your email address with anyone. Copyright 2020 Islamic Mortgage UK - All Rights Reserved. Find out more. Islamic guidelines on exchanges have … Islamic Mortgages A Viable Alternative to Interest Mortgages. Timeline. Islamic Mortgage UK has partnered with industry leading Sharia Compliant Finance providers to provide you with Halal mortgages, finance products and services within the UK. In recent years, however, the market has opened up to Islamic, or no riba', mortgage offerings which are compliant with Islamic law . 7.1% UK Muslim adults earn over £50,000 which is similar to the overall UK picture which shows that 7.4% of adults earn in excess of this figure. This gives even more choice to hardworking families across the UK trying to fulfil their home owning aspirations. United Bank of Kuwait. Different Types of Islamic Mortgage Available in the UK. Read on to find out how Islamic mortgages work. You might be wondering what is an “Islamic Mortgage”? They are based upon the Islamic finance principles of co-ownership (Diminishing Musharaka) and leasing (Ijara). AUB (UK) has been offering Shari’ah compliant home purchase plans since 1997. You can use it just like a conventional mortgage to buy or refinance your buy-to-let property. This follows the establishment of Islamic-compliant student and start-up loans, to encompass all faiths, and the setup of an Islamic Index on the London Stock Exchange. The terms of the agreement are laid out in writing between the parties and the buyer’s solicitor will advise the buyer on the terms of that agreement. We establish a partnership of mutual consent for the joint ownership of a property and rent our share out to you. Both types involve lenders purchasing a property and selling it to the buyer at a slightly increased price, or renting it to the buyer over a period of time until the mortgage is paid in full. Our Islamic mortgage alternatives are called Home Purchase Plans (HPP). Each lending institution has different criteria and different deals. The action and innovation on consumer financial products, including home loans, student loans and business loans among others, will ensure that all sections of society can help drive growth in the economy and support the UK in the global race. Under an HPP, a property’s ownership is split between the customer and the bank. HPPs sold in the UK are also subject to regulation by the Financial Conduct Authority (FCA), in much the same way as mortgages. A buy-to-let purchase plan is a Shariah-compliant mortgage alternative. There are good reasons for this discrepancy. With an Islamic mortgage the bank and the customer share the risk of the investment in the property and divide any profits between them. The second is a cost-plus model (murabahah) where a bank buys the apartment at a price above asking and a buyer pays back the cost over time. Check how the new Brexit rules affect you. With regard to the western world, Islamic Mortgages are probably most common in the United Kingdom, although they seem to be gaining steam in the United States as well. Another option is a co-financin… Murabaha mortgages usually require a bigger deposit of approximately 20% or more of the purchase price, while Ijara mortgages can be offered with a smaller deposit or around 10%. Under Islamic mortgages the bank technically buys a property which is rented to the customer on a 25-year term until sufficient payments have been made to match the purchase price, plus a small profit. Finance amount £ UK residents UK expats Product type ... Al Rayan Bank offers a range of other Islamic products and services. Islamic banks lack the economies of scale achieved by conventional banks. The Help to Buy scheme has already helped thousands get on or move up the housing ladder, and the government remains committed to making the aspiration of home ownership a reality for as many households as possible. HSBC is the only high street bank to offer an Islamic mortgage service, but smaller specialist banks such as Ahli United Bank, Alburaq, Islamic Bank of Britain have Sharia products. All are still available with 2 Year and 5 Year fixed rates. ), compared to the 53.1% of UK adults overall. The UK is a frontrunner in Islamic finance. Muslim mortgage has common rules and regulations with Conventional saving money, however, are organized to be “Sharia Compliant”. You can use it just like a conventional mortgage to buy or refinance your home. We have now entered the dawn of a new era in the West and we have available to us viable alternatives to conventional interest based mortgages. Is a co-financin… the two main types of Islamic mortgage available in Britain are Murabaha and Ijara Islamic alternatives... Bank offers a range of other Islamic products and services finance principles of co-ownership ( Diminishing Musharaka ) leasing. 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