HSBC Launches Islamic Mortgage
HSBC becomes first major UK bank to offer Islamic mortgages
1st July 2003
HSBC has become the first major UK bank to offer home-buying plans that allow Muslims to buy a home while staying within Islamic law.
Islam forbids paying or charging interest on financial transactions, meaning Britain's 2 million Muslims have been forced to buy their home outright or use the services of smaller or overseas banks.
HSBC's new Muslim mortgage follows the 'leaseback' principle, where the bank buys the property on the customer's behalf, allowing them to repay the loan at zero interest over the term of the mortgage. During this period, the customer pays a rent to the bank to provide a profit on the transaction.
This avoids the payment of interest, so allowing Muslims finance a new home while staying true to their religious beliefs.
Read More: BBC News
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