Home loans that are compliant with Sharia law through a specialist team who has over 10 years of experience in the industry.
Sharia Mortgages Available For:
- Islamic law compliant home loans
- Home loans with no interest payments
- Halal alternative to repayment/interest only mortgages
- Muslims purchasing property
Benefits we offer Sharia clients:
- Leading Whole-of Market Sharia Mortgage Broker
- Quick processing of loan applications
- Industry-leading customer service
- 24/7 customer portal with live updates on client applications
What is a Sharia Mortgage?
The Islamic law of Sharia forbids the charging and paying of interest on loans, such as is common with standard UK mortgages. For Muslims looking to purchase property in a non-Muslim country like England or Scotland, it can be hard to find a solution that is compliant with Sharia, as most mortgages on the market are interest based.
At Commercial Finance Network, we have a specialist mortgage team that will help you to find a Sharia mortgage that is fully compliant with Islamic law. By using a Sharia mortgage, Muslims can buy family homes in the UK, or purchase property for other purposes, such as investment.
The arrangement is not like a mortgage and is usually referred to as a house purchase product but for the purposes of this article, we will refer to it as a Sharia mortgage.
Types of Sharia Mortgage:
Musharaka – This type of Sharia mortgage is basically a deferred sale instead of a loan system. It works by the mortgage lender purchasing the property and then reselling it to you at a price that is calculated to include the cost of the property and how long you are paying it off over. You then make a monthly payment to pay off that agreed sale price.
Ijara – This is the more commonly used form of Sharia mortgage. In this arrangement, the mortgage lender buys the property and charges you rent for living there. You sign a promise to purchase and make monthly payment to pay the rent and the value of the property. This is a lease-to-own type of mortgage.
The deeds for the property are in the lender’s name until the loan is paid off and ownership is then transferred over. Essentially, the lender becomes a landlord of the property until it has been fully paid and then the deeds are transferred.
The Most Competitive Sharia Mortgage Deals
Due to the specialist nature of this type of mortgage, there are only a few lenders in the market that will provide a Sharia mortgage. High street banks in the UK will not generally offer this type of mortgage, so finding a provider and one that offers a good deal can be very difficult, which is why using a specialist broker is highly recommended as we work with all of the Sharia mortgage lenders in the market.
At Commercial Finance Network, we have a team of expert Sharia Mortgage Advisers who have been working with this type of mortgage for many years. We use our experience, expertise and our many years of building up contacts that offer great Sharia mortgage deals to find our customers the best one available for their circumstances. Our knowledge of Islamic laws also benefits us to help to find you deals that are halal.
Different lenders will suit different situations, for example, the value of the property, your affordability, any deposit amount and any specific details that differ from standard properties will be factored in to finding the best Sharia mortgage option. Therefore, it is important to choose a company that will be able to assess the whole market to find the exact Sharia mortgage that is right for your circumstances.
At Commercial Finance Network, we are able to find the best Sharia home purchase product on the market to meet your requirements.
Do Sharia Mortgages Cost More Than Standard Mortgages?
This depends on the lending provider that you work with. In some cases, it can cost more to take out a Sharia mortgage but this will depend on your personal circumstances and if you are using Commercial Finance Network, you will have access to all of the deals available. Due to the more specialist nature of this type of finance agreement, there are usually higher administration costs involved, which can result in paying more than you would with a standard mortgage,
Quite often, a higher deposit will be required for this type of mortgage arrangement, so where some standard mortgages require as little as 5% of the property value to be paid as a deposit, with Sharia, you are usually asked for 20% deposit instead. This provides greater security for the lender, as a finance arrangement with this added complexity provides a greater risk to them for getting their money back.
However, Commercial Finance Network has whole of market access to help find the right Sharia mortgage, so if 20% deposit is not available, there may still be some options that you can consider.
Why Take Out a Sharia Mortgage?
The reason people take out a Sharia mortgage is so that they can purchase property in the UK whilst staying compliant with Islamic laws. Paying interest is forbidden to make purchases, therefore Muslims living in the UK need an alternative solution if they want to make a property purchase.
If you are looking for a property for your family to live in, or you are investing in property in the UK and are Muslim, then a Sharia mortgage will help to make the purchase if you do not have the capital to buy a property outright.
Over recent years, more Sharia home purchase options have become available on the market, helping more Muslims in the UK to get onto the property ladder and take steps towards owning their own property.
What Happens with Stamp Duty?
In the UK, stamp duty is currently paid on properties that are priced at £125,000 or over. With the Sharia mortgage, the stamp duty will need to be paid when the property is purchased, so this will be included in the calculations. Before 2002, a stamp duty had to be paid when the property was purchased and when the property transferred into the new homeowner’s name. A law in 2002 changed this approach so the stamp duty is now only paid once.
Are Islamic Mortgages Regulated by the FCA?
Sharia home purchase plans provided from a reputable and proper company will be FCA (Financial Conduct Authority) regulated, so it is important to check that the company that you choose is registered with the FCA. Commercial Finance Network are directly authorised and regulated by FCA (reference number 796413). This offers full protection for the person taking out the Sharia mortgage, should there be any issues further down the line.
How to Apply for a Sharia Home Purchase Plan
The first step on taking out a Sharia home purchase plan is to speak to a Specialist Mortgage Adviser at Commercial Finance Network. We can then discuss your options and using the information you provide us with, we can get started on finding the right solution depending on the property value, deposit amount, affordability and other factors. We will then be able to match you with the best Sharia mortgage options to suit your circumstances and we will then walk you through the application process.
If you have already found the property that you want to buy, then we will work out whether the lender will be able to lend you the required amount. It is a good idea to speak to a mortgage adviser before you start looking for a property, so that you know exactly what price range of property you will be able to buy.
Contact us today on 03303 112 646 to speak with one of our specialist Sharia Mortgage Advisors who will talk through the process and make your first steps to owning a property with Islamic law compliant options. Alternatively, if you prefer, simply enquire via our short online form and we shall call you right back.