by Mark Johnston
The Ahli United Bank in the UK has been around since 1966 providing banking services between institutions in Kuwait and global markets as well as providing clients with practical financial advice and assistance in the United Kingdom (UK).
Ahli United are able to provide banking to its customer who require special needs and are able to understand their customers individual circumstances. This knowledge enables Ahli United to provide specialist mortgages that are in line with and approved under Shari’ah law.
It is against Islamic Law to pay or receive interest which creates a huge problem for Muslims living in Britain who are looking to buy a home. Until fairly recently only the very rich could by their own home.
AUBUK was once known as the United Bank of Kuwait have been offering home purchase plans since 1997. The plans are set out to meet specific standards of Islamic banking in the UK and were the first regulated bank in the United Kingdom to be off a mortgage product specifically for Muslims in the UK. The bank offers two types of Islamic finance, Murabaha and liara liara, both of which are approved under Shari’ah law.
Murabaha refers to the sale of goods at a price which includes a profit margin agreed by both parties. The purchase and selling price, other costs, and the profit margin must be clearly stated at the time of the sale agreement. In effect the property is bought by the bank who then sells on the asset to the individual at a fixed prices. This prices is slowly paid off over time until the full about is paid. Alternatively a type of leasing is carried out which is a little bit like hire purchase.
Ahli United is currently offering a variable mortgage at an initial rate 3.52%. The rate then moves to 6.4% with the cost for comparison of 0.80% APR. The Maximum loan to value is 75% so a deposit of at least 25% would be needed. There is no arrangement fee or early repayment fee.
There are a number of other providers offing Islamic mortgages. HSBC Amanah home finance offers a range of specific products based on the diminishing Musharakah way of financing to help customers buy a home without compromising their beliefs.
ABC International Bank offers Alburag Islamic home finance which is based on the Ijara and Diminishing Musharakah principles. The Islamic Bank of Britain offers a home purchase plan which is designed as an alternative to a traditional mortgages and is approved by the Bank’s Shariah Supervisory Committee.
Lastly, the United National Bank (UNB) offers Islamic mortgages through diminishing ownership which is based on the Ijara principles.
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