Bristol and West offers buy-to-let mortgage for Muslims
By Lorna Bourke | 12:02:47 | 06 October 2005
A new opportunity for Britain’s two million Muslims to invest in buy-to-let has been created by Bristol & West and the Arab Banking Corporation, which is offering a Shariah compliant buy-to-let home loan.
The product differs from conventional interest charging mortgages but the overall costs are very similar and competitive. Instead of paying interest for the use of money, the property is owned by the lender and leased to the buyer in consideration of rent, which is equivalent to the rate of interest charged on a normal buy-to-let mortgage. Rent is fixed for six months at a time. There are no penalties for repaying all or part of the loan. Rent is currently just over 5% of the amount borrowed.
‘Until recently Britain’s Muslims have not had a real choice in how they invest their money in keeping with their faith,’ said Alison Pallett, head of consumer lending at Bristol & West. ‘We have found that our Muslim customers have a particular interest in owning property and by offering a buy-to-let product which complies with Islamic law, we will be opening up many more possibilities for them.’
The alburaq range of home finance products is available either directly or through selected IFAs and is also available through selected branches of Lloyds TSB, which has specially trained Islamic Home Finance consultants. Lloyds TSB is offering alburaq Islamic Home Finance, in a growing number of branches across the UK, as part of an Islamic Financial service pilot. The bank is also offering an Islamic current account.
The launch of alburaq buy-to-let follows a price review in September, whereby the pricing of rent was lowered across the product range, which now includes self-certification and discounted rent products.
There are 2 million Muslims in the UK with estimated savings in excess of £1 billion in 2002. The estimated spending power of Muslim visitors to the UK in 2002 totalled £600 million. The estimated number of Muslim households in the UK is about 500,000.
Customers can obtain further information by contacting the alburaq helpline on 0800 587 88 66 (free phone) or by visiting www.alburaq.co.uk
Meanwhile, Lloyds TSB in Bethnal Green is to start offering Islamic banking services to the area’s Muslim community. The branch is the latest join Lloyds TSB’s Islamic Financial Services pilot, which has expanded to include seventeen branches across the UK.