Bristol & West has signed a deal with Arab Banking Corporation to launch an Islamic mortgage market within three months.
Following launch of the first Islamic mortgage by HSBC Armanah Home Finance last year, B&W is entering the fray with's ABC's London branch under the Islamic brand name alburaq - a name which is familiar to most Muslims as the winged steed that took the Prophet Mohammed from Jerusalem to Heaven - by providing the financing and back office support to the operation.
Products will be priced comparably to existing UK-based flexible mortgage products but will follow Shariah’ law – preventing the payment of any interest - and does not therefore represent a direct loan to the consumer.
Instead, the agreement will see the individuals who purchase the property effectively paying ‘rent’ to Bristol & West, co-owner of the property, while future payments are structured to eventually buy out B&W’s share in the property.
Shariah-compliant home purchase products are now possible in the UK thanks to a key change to last year’s Budget, which exempts co-ownership schemes from double stamp duty.
This now makes it possible for Bristol & West to tap a market with £1.6m potential UK customers.
Shariah compliant products are now thought to be worth around $500bn and growing in global popularity at around 10-15% a year.IFAonline
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