IslamicMortgages.co.uk supply support and advice for anyone looking for Islamic based mortgage and finance commodities and assistance within the United Kingdom via the internet. They have a wide range of mortgage products for you to choose from and include mortgages for first time buyers or people wanting to invest in property.

Shariah Law and Islamic Finance

The ground rule of Islamic finance is that all types of interest are prohibited. The Islamic financial template works on the foundation of risk sharing, meaning a customer and the bank divide the risk of any venture on approved terms, and split between them any profits.

The main groups within Islamic finance include:

Ijara, Ijara-wa-iqtina, Mudaraba, Murabaha and Musharaka.

• Ijara is the rental contract by which the bank purchases a product for the customer and then rents it back over a specified period of time.
• Ijara-wa-Iqtina is a comparable contract, but the customer is able to purchase the product at the end of the agreement.
• Mudaraba offers professional investment by a financial specialist whereby the bank and the customer divide any profits. The risk to a customers is that they could lose their money should the investment be profitless. A handling fee is only charged by the bank if the investment makes a profit.
• Murabaha is a type of credit which allows customers to make an acquisition without needing to take on a loan carrying interest. The bank purchases a product and then offers it to the customer on a delayed basis.
• Musharaka is an investment association whereby profit sharing terms are consented to beforehand, and losses are fixed to the sum that has been invested.

Manzil Home Purchase Plans

Islamic Mortgages have the following plans available

Standard Ijara Home Purchase Plan

• A maximum of 65% finance is obtainable
• The basic rent rate of 4.49% is fixed until the 1st April 2010 after that a fixed limit of 2.50% above 12 month Bank LIBOR (London Interbank Offered Rate) for the remainder of the term
• The limit is secured and guaranteed for the whole period
• There is a annual review of the basic rental
• It is possible to pay in full whenever without incurring early payment charges
• It is possible to make extra payments in any sum at each yearly review without incurring any penalties
• This plan is obtainable for the buying and refinance of a freehold and leasehold premises

Buy to Let Ijara Home Purchase Plan

• A maximum of 65% finance is obtainable
• The basic rent rate of 4.99% is fixed until the 1st April 2010 after that a fixed limit of 2.99% above 12 month Bank LIBOR (London Interbank Offered Rate) for the remainder of the term
• The limit is secured and guaranteed for the whole period
• There is a annual review of the basic rental
• It is possible to pay in full whenever without incurring early payment charges
• It is possible to make extra payments in any sum at each yearly review without incurring any penalties
• This plan is obtainable for the buying and refinance of a freehold and leasehold premises

Buy to let Murababa Purchase Plan

• A maximum of 65% finance is obtainable
• There is a profit rate of 7.00% which is secured and guaranteed for the remainder of the term
• Monthly repayments are secured and guaranteed for the whole period
• The property is recorded in your name or any other names
• You are able to sell the property when it suits you
• This plan is obtainable for the buying of a freehold and leasehold premises

None UK resident Home Purchase Plan

• A maximum of 65% finance is obtainable
• Ijara and Murabaha Home Purchase Plans are obtainable
• The Ijara basic rent is based on a fixed margin of  3.49% as well as the London Interbank Offered Rate for 12 months
• The Murabaha profit rate of 7.49% is secured and guaranteed for the remainder of the term
• The purchase or refinancing of a residential property for either a letting investment or for private use is available
• There is an application charge of 1.25%
• This plan is obtainable for the buying of a freehold and leasehold premises

How does Ijara operate?

The bank under Ijara will purchase and possess the property of your choice. They will then sell it to you at the same purchase price with repayment extending up to 25 years. During the time you are purchasing the property from the bank you will pay rent to the bank whilst you are living in the property that they own. The bank makes its profit from the rent they collect from you and when you have finished paying for the property it will be yours to own. This means that any profit the bank will make will be from the larger price realized for the property.

Eligibility

This type of mortgage is eligible for people who have a permanent job or are in self-employment and who are capable of paying the purchase price prior to the age of 65.  The minimum age is18 years.

• You will need to show past bank statements
• A credit check will be undertaken
• Your employment position will be checked
• A minimum deposit will be required which must be of 35%

Properties and their cost that qualify

• All sorts of residential properties or owner occupied properties will be considered that are in England & Wales.
• The minimum lease term is 40 years (not yet ended and over and above the payment period
• The minimum value of the property is £65,000 for residential
• The minimum amount of finance available is £42,250
• The buy to let property value must be £100,000
• The minimum amount of finance available is £65,000

Length of payment terms

For Ijara it is up to twenty-five years with a minimum term of seven and a half years. There is a maximum of fifteen years for non-UK citizens.

Ratio of income to loan

The amount of the loan can be three times the main yearly earnings of an individual or three times the bigger earnings along with one times the lower earnings or two and half times the joint earnings for shared applicants.