A reader’s brother is planning to get a Sharia-compliant mortgage, but he is unsure about how the mortgages work.
Tony Davis, myfinances.co.uk mortgage expert from Mortgage Meadow, takes him through the problem and what it means to his finances.
A reader from London asks:
My brother wants to get a Sharia mortgage.
Are they any better value than standard mortgages? No one in my family has ever got one before.
Are they easier to get in the credit crunch?
There is a demand for Sharia Mortgages and as such they are increasing in the UK and there are several high street banks that offer them, HSBC for example.
Generally they operate by the customer choosing the property and agreeing a price with the vendor in the normal way.
The property is then purchased by the bank, who takes its legal title. The property is then sold onto the customer at the original price, with payment spread over an agreed period of time. During that time, the customer also pays the bank rent for the use of the property.
Once the agreed period of time has elapsed, ownership of the property is transferred to the customer.
If you have a question for Tony, go to the myfinances.co.uk Ask the Mortgage Expert section. “>
Or for more information or mortgage advice go to Mortgage Meadow.
Mortgage Meadow is an independent mortgage broker and is authorised and regulated by the Financial Services Authority
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