Islamic Mortgages

In the past, British Muslims have found it difficult to purchase a property due to their faith. They are forbidden under Sharia Law to pay or receive interest, meaning that they were unable to take out a mortgage without acting against their faith. In 2002, the Government made Sharia compliant mortgages available in the UK and now many large banks offer this form of Islamic finance. Sharia mortgages are structured so that the person who wishes to purchase the property pays no interest but the banks still make money. There are three types of Islamic mortgage; Diminishing Musharaka, Murabah and Ijara.

Diminishing Musharaka

This has proven to be the most popular form of Islamic finance. Once you have agreed to purchase a house, the bank will buy your property and grant you a lease. A trust is then created between you and bank and with each payment you make to them, your share in the property increases. Once you have purchased all shares in the property, the bank transfers the legal title of the property to you.

Murabah

This type of Islamic finance is often used by Muslims who have some capital behind them when starting the process. You will pay a percentage of the property up front, meaning that the house will be officially registered in your name. Before this, the lender will purchase the property at market value and sell it back to you at a higher price, dependent of the value of the property, the repayment term and amount of deposit paid up front. You and your bank will sign a Murahaba mortgage contact in which you will have agreed a repayment term.

Ijara

Ijara is another popular type of Islamic finance due to its flexibility and because there is no requirement for a large initial payment. The bank buys the property and rents to you for an agreed term. Once the lease period is completed the bank will transfer the title of the property to you.

 

Using Lawson Taylor

The majority of solicitors and conveyancers in this country do not have an extensive knowledge of this fairly new way of purchasing property. At Lawson Taylor, our specialist conveyancing solicitors have expertise in Islamic finance, which means you will avoid any delays and misunderstanding which often arise when using a solicitor with little knowledge of Sharia law. This allows the process to be as quick and straightforward as possible. Unlike a lot of online conveyancers, with Lawson Taylor you will only pay a fixed fee. There are no hidden additional charges, meaning that you pay what is agreed at the start of the process.

Contact Lawson Taylor today for an Sharia conveyancing quote.