Sharia Law mortgages, or Islamic mortgages, became widely available in the UK in 2002. Prior to this it was difficult for all but the wealthiest Muslims living in Britain to own a home, due to Islamic law forbidding the paying or receiving of interest.
There are two main types of Islamic mortgage – Murabaha and Ijara. In basic terms, both involve the lender purchasing a property and selling or renting it to the buyer at a slightly increased price, until the mortgage is paid in full and the buyer owns the property.
Islamic mortgages must also comply with various other aspects of Sharia Law. For example, the money used by the bank to purchase the property must come from activities deemed permissible by Islamic standards.
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- With the paying and receiving of interest forbidden under Islamic law, buying a home can be an obstacle for British Muslims. The rise of Sharia-compliant mortgages in the UK since 2002 has begun to ease the process.