Muslim Mortgages?

theGrinch

its a profit share or sth. i sold to a person with such a mortgage and NEVER again. the delays were unreasonable. i think there are 3 sets of solicitors racking up fees for a start.

needaspirin

In Saudi Arabia one of my Islamic friends explained to me that he had a bank account that paid no interest. The bank then loaned money from such accounts interest free to poorer people.
Perhaps we in the West could learn something from selfless acts like this.

silvercar

The bottom line is that islamic mortgages are constructed in such a way that there is no direct interest charge, so a devout muslim can get a mortgage without breaking any religious laws.

The bank buys the property and rents it to the borrower but instead of charging interest the bank charges rent. When the last payment is made the ownership is transferred to the borrower. The whole deal is constructed so that the rent payable over the term of the mortgage is equal to what would have been the monthly repayments on an "ordinary" mortgage. There is no gain on this mortgage over others and so no reason to think that this is a clever way of getting an interest free mortgage.

There was a disadvantage in that CGT was payable on the gain the bank made; there were plans to sort this out. Another problem is that the borrower is not actually a home-owner in the legal sense as the property is owned by the bank until the final payment is made.

AFAIK there is no restriction on non-muslims obtaining these mortgages, though there would be little to gain.

astonsmummy

Toto wrote: »

Me too, it's like when people say 'I'm not being racist or anything' directly before making a racist remark.

Oh I love that one, so thoughtful :rolleyes: :rotfl:

Hemel_2

This BBC article may help?

http://news.bbc.co.uk/1/hi/business/3035292.stm

LittleMissAspie

I thought there was also a second type, where the bank lends you the money to buy the house but also charges a fee for doing so. You then pay back the entire amount over 25 years. (The fee is about the same as interest would be over the term).

ryandj

The mortgages are called sharia mortgages I think. This is interesting...

http://www.bbc.co.uk/religion/religions/islam/living/mortgages.shtml

ruggedtoast

Before anyone gets all excited about the prospect of a 0% Sharia loan, make sure you arent going to miss any of the payments, the penalties for default are, somewhat severe. Lets just say you wont be playing the piano again.(HSBC are merciless too).

beingjdc

We thought a while ago in the pub that, while Sharia mortgages aren't very good value, they might be a way of avoiding negative equity. The way it usually works is that say a house is £100k, someone buys it on your behalf, and you agree to buy it back for £200k in installments over 25 years.

But we've decided that if you failed to keep up repayments you could be sued for expectation-based damages in contract law, so it wouldn't actually solve the problem. Indeed it might make it much worse if you're deemed to owe £200k right from day 1.

melancholly

Riq wrote: »

"I'm not racist because I have mixed race friends and a polish friend"


*shakes head*

That excuse always makes me laugh.

it's up there with 'i'm not being funny but..............'

guarenteed to be an offensive comment of some sort coming next

(and when i hear myself saying it, i cringe - it must happen without me noticing too!)