Shariah-Compliant Mortgages Said to be Gaining Ground in the UK
Note that this mechanism is essentially a convoluted construct to replicate interest payments, without calling them interest payments…
The Islamic Bank of Britain has reported a 63% rise in take-up of its home financing products for the first three quarters of 2012.
The growth in demand for the Sharia-compliant bank’s alternative to mortgages was fuelled by its expansion into buy to let, with the launch of the Buy to Let Purchase Plan in November last year.
IBB head of sales and service Imran Pasha said: “The move into buy to let has played an important role in the growth figures announced and the Bank is developing the product range.
The IBB residential Home Purchase Plans also continue to perform well.”
The minimum deposit for IBB’s fixed and standard Home Purchase Plan products is 20%.
Unlike a regular buy to let mortgage, under the Buy to Let Purchase Plan the bank and customer buy the property jointly, after which the customer pays a monthly fee representing rent to the bank and also the gradual purchase of the property. The buy to let product is available with a 25% deposit and has an administration fee of 1% or a minimum of £995.