ISLAMIC FINANCE: Shariah Banks helping Expats buy property.

As published on iexpats.com, Thursday Agugust 22, 2019.


Expats struggling to find a home or buy to let mortgage in the UK could find a Shariah compliant mortgage may suit their needs.

With a limited pool of lenders cherry picking applicants, picking up a mortgage back in the UK can be a tough ask for many expats.

Most high street banks have dropped out of the market and only a few niche lenders are taking on new business.

That’s where Shariah compliant finance comes in by offering a different way of doing business to British expats.

Not only are some key lenders readily looking to expand their businesses, but they are also offering advantageous terms to expats who could be rejected by other lenders in the sector.

Shariah compliant finance means lenders cannot make money from lending money, so offer shared ownership purchase plans instead of interest-bearing loans.

Basically, the property buyer pays rent to the lender instead of interest based on the share of ownership and gradually buys the property by paying an additional premium over the term of the agreement.

One Shariah compliant lender, Gatehouse Bank has produced two short videos to explain how the deals work in clear terms.

Both are posted on the bank’s web site.

The bank’s chief commercial officer Paul Stockwell explains that Shariah compliant finance is not just for Muslims, but property buyers of any faith.

“It is clear from recent research carried out by the bank that we need to work harder to ensure that people understand how Shariah-compliant finance works,” he said.

“We need to provide potential customers with easy-to-understand information about what Shariah-compliant finance is, and the benefits it can offer them.”

Expats could find that Shariah compliant lenders will consider applicants from countries blacklisted by traditional lenders.

They also offer more relaxed lending terms and will look at buyers seeking cheaper properties and who earn lower salaries – often from £25,000 a year.

For buy to let loans, the lenders will also consider funding limited companies, which is another restricted market in the UK.

Besides Gatehouse, Al Rayan is another active Shariah compliant lender in the UK.

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