The presence of Sharia-compliant mortgages in UK finance is becoming stronger, according to Waqar Ahmed, sales and marketing officer at Islamic finance provider Alburaq.
According to Ahmed, the 2 million strong presence of Muslims in the UK signals positive growth potential for Islamic retail banking, as well as facilitating the Muslim community with financial services that do not compromise their religious beliefs.
"The UK market continues to evolve and Alburaq has approved over £100 million worth of mortgage business in the last 12 months and is set to see the total market grow to over £1 billion by 2009," he said.
Sharia-compliant mortgages combat the problem of paying interest – the main financial issue conflicting with the Islamic faith – by allowing Muslims to rent back properties bought by mortgage lenders. Typically, a lender will pay for up to 90% of the cost over a period of 25 years. The borrower then rents the property and pays purchase installments over the 25-year period, leaving them as the owner by the end of the term. Economically, the numbers involved are not dissimilar to an interest-only mortgage but the legal structure and contracts are completely different, ensuring that no interest is payable.
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