HSBC offers "Muslim mortgage"
24 February 2004
A branch of high street bank HSBC is to offer a new type of mortgage that adheres to Islamic law, to help Muslim customers buy houses.
The branch in Middlesbrough is offering the mortgage in a bid to help Muslim customers torn between buying a home and upholding their beliefs.
Under the new scheme HSBC will buy a property and then lease it back to the customer through terms agreed, since Islamic law forbids the receipt and payment of interest.
Managers from the branch have reportedly received a number of requests for the mortgage, which entails customers making monthly payments made up of rent and an amount towards the purchase price to HSBC.
UK Head of HSBC Amanah Finance, Noaman Hasan told the BBC: "The models of Islamic finance have been there for centuries, but in the last 30 years they have been evolving into a more formal structure which the modern banks can use to offer facilities to the customers without having to charge interest.
"They are not without cost, but they don't have to involve interest. Although they might be structured in the Islamic model, anyone can take up this kind of financing."
As part of the scheme, HSBC will own property until the final payment is received.