Our purchaser has an Islamic mortgage

crisp

I am the vendor and my solicitor wrote the following:

"Their mortgage is an Islamic mortgage. The way that these work is that the buyer contracts to buy the property but then assigns the beneift of this agreement to the Bank between exchange and completion, so that you effectively sell to the Bank, who then let the property back to the Buyer. I assume that you are happy with this arrangement as the same purchase price will be paid and you are not required to do anything more. Please confirm."

can anyone tell me more about islamic mortgages? does this mean the bank is stepping in to buy the property?

sockpuppetuk

http://news.bbc.co.uk/1/hi/business/2525635.stm
interesting piece there all about them

Emmzi

Basically yes. Under Islam, you cannot borrow money. so the bank buy and 'rent' the property for, oh, 25 years or so. Then hand it over as a present.

Shouldn't be a problem.

nomoneytoday

It's fine. Due to islamic law you cannot lend or borrow, so this is a way for people to buy property

jamesd

There's no financial reason for you not to agree.

ManAtHome

I think you're ok lending and borrowing as long as it's interest-free. Alternative mortgage is for the bank to buy the house, say £100k then sell it interest-free for say £200k (making a profit from trading is ok).

Joe_Bloggs

Off topic I know.
Can the purchasers have shares in the bank like those who buy with a building society ? This way they get a say like many others in the same position as to how the bank is managed.
J_B.

nmiah786

crisp wrote:

I am the vendor and my solicitor wrote the following:

"Their mortgage is an Islamic mortgage. The way that these work is that the buyer contracts to buy the property but then assigns the beneift of this agreement to the Bank between exchange and completion, so that you effectively sell to the Bank, who then let the property back to the Buyer. I assume that you are happy with this arrangement as the same purchase price will be paid and you are not required to do anything more. Please confirm."

can anyone tell me more about islamic mortgages? does this mean the bank is stepping in to buy the property?

I dont think the fact that the buyer has a Islamic mortgage makes any difference to you financially as a seller. Maybe the solicitor is just informing you! Dont know why they have highlighted to you though!

Paying or receiving Interest is Haram (forbidden and sinfull) in Islam, this makes a traditional mortgage Haram. Islamic Mortgages is a new thing in the UK. There are quite a few products here but the opinion is divided amongst Muslim whether it is trully Islamic. The available products are being constantly refined to make it more Islamic, so hopefully one day in the not so distant future we might have trully Islamic Mortgage products widely available and accepted by all Muslims.


The common form of Islamic mortgages here works like this;

Buyer agrees a price with the Vendor.
Buyer informs the lender about the property.
Bank buys the property for the buyer.
Bank then sells the property to the buyers at an agreed increase in price.
Buyer pays a monthly payment to the bank.
A percentage of the payment comes off the capital and the rest is classified as rent ( a bit like Shared Ownership).
As more and more comes of the capital the percentage paid as rent reduces until it becomes nil.
The bank the passes the property over to the buyers.

HTH and hope I havent confused things:eek:

annie-c

Agree with others - the Islamic mortgage is a new way for banks to sell 'mortgages' to Islamic customers - you have nothing to worry about - and neither has the lender.

crisp

thanks for the replies.

my solicitor only highlighted it because the banks/buyers solicitors want me to now ok it. the bank is a mainstream bank. why they want me to ok it now shortly before exchange, rather than not ask in the last three weeks while we have been waiting is really sloppy.

well I wish I had know earlier as its now causing silly delays. we have been ready to exchange for 3 weeks, but the mortgage had to be amended. the estate agent has put down the delay to it being an Islamic mortgage; but why the admin to change the mortgage offer should take any longer than a normal mortgage I know not why unless someone at the bank is a bit slow redoing the sums.

Its particularly frustrating, as I turned down another buyer.

it all sounds a bit "technical" for in the end the buyer borrows money and gets the house and the bank lends and makes a profit.

itn

it shouldnt take longer to complete then any other conventional mortgage, ive taken an islamic mortgage through hsbc amanah finance. The advisor informed me that they are selling twice as many islamic mortgages then standard conventional mortgage. The paperwork is different to a conventoinal mortgage so the delay maybe with the solicitors for the buyers. The solicitor dealing needs to know what he is doing and so can sort out the paperwork asap. As previous the bank and buyer of house are joint owners of the property, and you in effect rent property from the bank until the period is over.

regards

itn