HSBC will launch the UK's first high street Islamic mortgage and current account on July 14th, which...
HSBC will launch the UK's first high street Islamic mortgage and current account on July 14th, which allows customers to lease the property from HSBC over a typical mortgage period as a Sharia law product, but review the "rent" payments every six months.
Under the HSBC Amanah Home Finance scheme, HSBC will buy the property and lease it to the customer, who pays monthly payments of rent and payments towards the purchase price.
This matches the literal definition of existing mortgages which sees the property deeds owned by the bank or lender until the total purchase sum and interest is fully paid.
Because Muslims are not allowed to pay or receive interest under Sharia law, so around 70% of the UK's 100,000 Muslim-owned homes break religious rules by purchasing traditional mortgage products.
But this idea is not limited only to Muslims, says HSBC, as non-Muslims will also be allowed to buy property through the Amanah home finance scheme.
Customers can ask at any time for the property to be sold as someone would if they decide to move house.
HSBC says it will attempt to keep schemes competitive by reviewing the market every six months - on 1st of January and July - by comparing payments required on Amanah schemes with existing mortgage interest products and ensuring the combined payment does not cost considerably more through Sharia-approved schemes than traditional mortgages.
Products will initially only be available at four branches from July 14th - Market Street Bradford, Queen Street Cardiff, New Street Birmingham and Whitechapel London - but will then extend to a further 25 branches by September 14th.
The Amanah current account will also be similar to a conventional bank account but will not be allowed to carry an overdraft, debit or credit interest.
HSBC's Islamic finance division - known as HSBC Amanah - created the product which has now been approved by high-level Islamic scholars, says Noaman Hasan, UK Head of HSBC Amanah Finance.
"Buying your own home is an aspiration for most people, but the special needs of British Muslims have been overlooked by the UK financial services industry," says Hasan.
"We have spent the last 18 months working with the Muslim community, the Treasury, FSA and the Council of Mortgage Lenders, amongst others, to see how we can redress that balance. British Muslims now have the opportunity to purchase property and manage their money more easily, without having to compromise their deeply held convictions," he adds.
A detailed factsheet about the product is available by 0800 5877 786.
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