This means we can offer competitive finance packages based on your situation. Under an HPP, a property’s ownership is split between the customer and the bank. 1982. Each lending institution has different criteria and different deals. Under this structure, the purchaser and Islamic bank will be purchasing the property jointly. We establish a partnership of mutual consent for the joint ownership of a property and rent our share out to you. 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. We’ll send you a link to a feedback form. Home finance. From today the rules have been amended to enable banks that sell HPPs to purchase a government guarantee for them. In order to purchase the government guarantee, banks will have to satisfy the same stringent criteria for an HPP as for a normal mortgage. FREE SERVICE – We arrange residential and investment mortgages at no cost. A home purchase plan is a Shariah-compliant mortgage alternative. Don’t worry we won’t send you spam or share your email address with anyone. 43.2% earn between £20,000 and £50,000, compared to the 39.5% of all UK adults. In recent years, however, the market has opened up to Islamic, or no riba', mortgage offerings which are compliant with Islamic law . And this is no different for Islamic mortgages. HSBC’s total UK mortgage portfolio is in excess of £70bn. What is an Islamic Mortgage? Additionally, the Islamic Bank of Britain have stated their intention of participating to offer Home Purchase Plans under the scheme. 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. It will take only 2 minutes to fill in. 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. 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 … Home Purchase Plans (HPPs) are a Sharia law compliant alternative to mortgages and are often known as ‘Islamic Mortgages’. Pay rent not interest when you purchase or refinance a property. You can change your cookie settings at any time. 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. 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. ), compared to the 53.1% of UK adults overall. All content is available under the Open Government Licence v3.0, except where otherwise stated, Coronavirus (COVID-19): guidance and support, Transparency and freedom of information releases. Islamic mortgages are designed to achieve the same economic results while complying with Shariah. In this way, a customer gradually buys the property from the bank and eventually becomes the sole owner. In the UK Islamic mortgages are more expensive than conventional mortgages. Chairman, UK Islamic FinTech Panel “I’m delighted to give my support to the Primary Finance Home Purchase Plan.” “This carries all of the justice and risk sharing that an Islamic contract should have, in a way which I have not seen in any of the other products currently available.” They are based upon the Islamic finance principles of co-ownership (Diminishing Musharaka) and leasing (Ijara). HPPs sold in the UK are also subject to regulation by the Financial Conduct Authority (FCA), in much the same way as mortgages. United Bank of Kuwait. 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. A buy-to-let purchase plan is a Shariah-compliant mortgage alternative. Banking you can believe in. 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. Furthermore these mortgages have been approved by many leading scholars. 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. The Al Rayan Bank (formerly Islamic Bank of Britain) and UBL UK (United Bank Limited) are the main providers of Islamic mortgages in the UK, however other providers may also offer Sharia-compliant mortgages. If you’re considering purchasing a property with an Islamic mortgage, remember to factor in the following costs: Al Rayan Bank has the widest range of Islamic mortgage alternatives in the UK. Many families choose to rent for the long-term rather than participate in a bank loan which involves the taking or paying of interest. However, the inclusion of HPPs in the Help to Buy scheme introduces more choice for all consumers and perspective homebuyers. The following banks and brokerage institutions offer Islamic, or no riba', home mortgages which are compliant with Islamic law. Finance amount £ UK residents UK expats Product type ... Al Rayan Bank offers a range of other Islamic products and services. 7% of Muslim adults earn less than £20,000 per annum (p.a. A buy-to-let purchase plan is a Shariah-compliant mortgage alternative. Under Shariah finance principles, money must be put to a good use to generate profit supported by genuine trade or a business related activity. Development of Islamic Financial Institutions and Regulatory policies associated Islamic Finance and mortgages in the UK. Islamic mortgages also involve more, and more complex, legal transactions. Help to Buy mortgage guarantee scheme extended to include providers of Home Purchase Plans. 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. Islamic Mortgages A Viable Alternative to Interest Mortgages. You can use it just like a conventional mortgage to buy or refinance your buy-to-let property. I am delighted Home Purchase Plans will now be available under the Help to Buy scheme. Interest payment is prohibited– “All types of intrigue are riba and henceforth restricted”. This is not a trivial business practice - the Prophet Muhammad is said to have cursed the consumer of interest, the one who pays it to others, the witnesses to such a contract, and the one who records it in writing. Islamic guidelines on exchanges have … Up to 80% finance offered on property value of £100k or more. An Islamic mortgage / halal mortgage / home purchase plan is a financial product designed to help Muslims purchase property without borrowing money. We use this information to make the website work as well as possible and improve government services. Check how the new Brexit rules affect you. The UK is a frontrunner in Islamic finance. This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government.