Islamic Bank Of Britain Unveil Shariah Mortgage Alternative

Thu, 17 Jul 2008

The Islamic Bank of Britain (IBB) has added a new product to the UK's mortgage market with the launch of its Home Purchase Plan (HPP).

The HPP has been billed as 'the mortgage alternative' that enables customers to purchase their homes in a Shariah-compliant manner.

The product is being added to IBB's suite of services that are compatible with Sharia law, including current accounts, savings accounts and personal finance .

Under the new arrangement, both the customer and the bank are required to contribute towards the purchase of the home and become partners in the deal.

As a result, the IBB argues that customers are offered greater peace of mind and security since ownership is shared between the bank and the customer, as are the subsequent risks.

Over the period of the agreement, the customer makes monthly purchase instalments in order to buy the bank's share of the property . As each instalment is paid, the bank's share in the property diminishes while the customer's share increases.

Sultan Choudhury, IBB's commercial director, described the plan as a "highly competitive product for customers who wish to finance their home purchases in an Islamic and ethical way".

"Open to all faiths, the HPP gives UK consumers a real alternative to conventional interest-based mortgages, which have suffered in the current financial climate," he commented.

"Customers uncertain of what their options are as a result of the credit crunch will find that IBB's Home Purchase Plan follows a refreshingly new way of home financing that may be suitable for their needs."

Choudhury added that the HPP is "the only product in the UK whose source of funds is completely 100 per cent Shariah-compliant".

According to figures from the HM Treasury, the Islamic mortgage market is now worth over £500m in the UK, thanks largely to a 50 per cent increase in business last year.

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