- Story by: Andrew Wragg
- Magazine: FinancialAdviser
Islamic Bank of Britain has revealed the details of its Home Purchase Plan, which is billed as a 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.
Sultan Choudhury, IBB’s commercial director, said the plan was based on the Islamic financing principles of leasing and partnership. Under the arrangements, the customer and the bank each contribute towards the purchase of the home and both become partners.
He said: “The HPP gives UK consumers a real alternative to conventional interest-based mortgages, which have suffered in the recent financial climate.”
“Customers uncertain of what their options are as a result of the credit crunch will find that HPP follows a refreshingly new way of home financing that may be suitable for their needs.”
However, Kiran Shah, director of Middlesex-based IFA, Lotus Benefit Consultants, said that Shariah products were still “low key” and not being made readily available through IFAs.
He said: “We have a lot of clients who are quite happy to take ordinary mortgages and not once have I actually been asked about a Shariah-compliant mortgage product.
“A lot of our Muslim clients are in the buy-to-let sector, and they have been happy to re-mortgage via standard mortgage products.”
According to HM Treasury, since 2003 the Islamic mortgage market has grown to over £500m, and increased by around 50 per cent in 2007.