Muslim Mortgages?

dave1223

Hi, a friend of mine told me that for religous muslims they can actually get a 0% interest free mortgage?

Is this true, im sure he said that HSBC are doing these mortgages because the Muslim religion states that if you borrow money you can only repay the amount you borrowed?

Never heard anything like this before. Im sure it wasn't a wind up as he is a genuine straight headed person who would not pull a prank like this on me.

Really intresting subject if it turns out to be true.

Thanks Regards Dave.

nurserebecca

This sounds like a wind up. Not only does it not make good business sense but it also is discriminatory against non-muslims. There would be uproar if this was the case.

Ma77hew

It is true that they can't pay or recieve interest.

But i don't think there are many, if any, banks that offer this.

amcluesent

Yep, there are Islamic mortgages designed to get around 'usury' by a contrivance of the bank owning the home and charging 'rent' while the capital is paid off.

It's actually pension arrangements which favour Muslims, again to avoid then getting all offended by someone profiting from charging interest. The islamic pension means that on the death of the holder, the dependants don't lose the annuity and it become part of the estate.

southernscouser

:rotfl: :rotfl: :rotfl:

As far as I know, Muslims aren't allowed to borrow money (or pay interest) or something like that.

As for 0% mortgages? :rotfl:


http://www.realestatejournal.com/buysell/mortgages/20030320-frangos.html

flower_72

It's not really a mortgage as we know it. They are in fact leasing the property from the bank after having put down a massive deposit (30% or so) . HSBC does islamic mortgages.


I found that link of you're interested: http://www.bbc.co.uk/religion/religions/islam/living/mortgages.shtml

dave1223

I don't know the truth, but my friend seems pretty sure about it.

I don't think its wind up either..

As you already said they can't pay interest..

caileag

Been around a while now - while Islam forbids the charging of interest on a debt (or paying of interest on a credit, IIRC) these are not the "interest-free mortgages" you are thinking off! Until you pay back the principal, you must rent the property from the bank. Ownership only passes to you once the whole amount is paid back.

These are not discriminatory, they are open to all - however, because of stamp duty, you may well find it less attractive than a standard deal.

See here for an article from when HSBC entered the market.

DrFluffy

It's true, and HSBC do offer them, as do many branches of high street banks in and around East London (especially Whitechapel).

HSBC launched their halal mortgage a few years back, with lots of national publicity... It was quite funny to watch the rest of the country go mad, when the Islamic banks around Whitechapel have been offering them for a long time!

DrFluffy

http://www.islamicmortgage.org/

trudiha

What your mate has told you is sort of true. Paying interest is against Shariah law and some banks, including the HSBC offer finance in such a way that interest isn't payable, part of the house is bought every month and the rent is paid on the rest. However, if you were to work this out in terms of an APR it's slightly more costly than regular mortgage borrowing. The HSBC's product is run by a part of the bank called Amanah, all of the details are on its website.

The way that household insurance is sold is fascinating too, it's based on the premise that no one can make money out of the misfortune of others.