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Islamic mortgages becoming more popular, report claims

Mon, 30 Jun 2008

Islamic mortgages might be attractive to people looking for an alternative to traditional products, it has been claimed.

Such mortgages are becoming increasingly popular with consumers as they look for substitutes to standard financial offerings, reports the Observer.

However, as sharia products do not charge interest, people have to look at other things when they are comparing deals from different mortgage lenders .

Speaking to the paper, Nader Kamel, sales quality manager for HSBC Amanah, said: "You should consider how much flexibility you need, and how much it will cost you to take out the financing . Are there any fees? Can you make lump sum payments? Can you rent out the property ? How much rent is the bank charging you?"

Farrukh Raza, from Islamic Finance Advisory and Assurance Services, reminded people that even though the mortgages do not charge interest, the bank will still recoup extra money, through rent or a profit scheme.

Last week, the Guardian reported that Ray Boulger, mortgage expert with broker John Charcol, is hopeful that some mortgage lenders will up the loan-to-value they are offering to customers in coming months.
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