Many
Muslims throughout the UK are happy to pay a small premium
in order to avoid having to compromise on their religious
beliefs, and these mortgages are becoming increasingly popular.
Again,
make sure you consult a professional mortgage adviser to
check that you are getting the best possible deal for you.
Question:
Are these Islamic mortgages certified or approved
by religious authorities in some way?
Answer:
Yes, they are. All banks offering Islamic financial products
are required to have a Sharia Advisory Board,
consisting of recognised experts on Islamic (Sharia) Law.
Check with the bank concerned if you would like to know
more about their Sharia board.
Question:
Someone mentioned the Diminishing Musharaka
principle to me. How does this fit in with Ijara and Murabaha
mortgages?
Answer:
Musharaka means "partnership". Ijara (lease) schemes
usually incorporate the Diminishing Musharaka principle.
What
it means for you is that at the beginning of the mortgage,
you are effectively in a partnership with your lender. You
own a portion of the property, equivalent to your deposit,
and they own the rest. You are allowed to live in the property
and pay rent in return for this facility.
As
you repay more of the property's purchase price, you gradually
own a greater portion of the property, and your rent decreases.
As you own more, the partnership (musharaka) is said to
diminish, eventually ending when you have repaid the entire
purchase price of the property – hence "Diminishing
Musharaka".
Question:
Are Islamic mortgages suitable for buying flats
on leasehold too?
Answer:
Usually. You need to check that the mortgage you are considering
allows this, but most Islamic mortgages do.