Muslims get mortgage choice
12 May 2004
Arab Banking Corporation and Bristol & West are to join forces to launch an Islamic mortgage scheme.
It is hoped the alliance of one of the top banks in the Arab world and one of the UK's leading mortgage providers will enable more of the Muslim community to become homeowners while remaining faithful to the laws of Islam.
The product will be marketed under an Islamic brand name, alburaq, and it adheres strictly to all laws concerning the treatment and banking of money.
It follows the launch a few months ago of the HSBC mortgage aimed specifically at Muslims.
In order to comply with Sharia law, which prohibits the paying or receiving of interest, no direct loan is involved. Effectively, the customer becomes the co-owner of a property alongside Bristol & West, and then over time they buy out B&W's share while also paying rent for occupation of the property.
Julie Blunden, head of market development at Bristol & West said: "Working with Arab Banking Corporation has given us a valuable insight into the financial needs of the Muslim community. "
Keith Leach, a senior manager at ABC said: "I believe our arrangement will offer customers the best of both worlds."
The net cost of an alburaq package will be broadly comparable to the cost of an equivalent mortgage, thanks in part to last year's Budget, which exempted co-ownership schemes along these lines from the need to pay double Stamp Duty.
The initial alburaq home finance packages will be available some time in the next three months.