We understand the importance of providing property services that comply with religious requirements.
The process of re-mortgaging, re-financing, or purchasing a property in a way that respects the teachings of your faith can be difficult, but our solicitors have a wealth of experience in providing services that are compliant with Islamic, Amanah and Shariah law.
We work hard to achieve the results our clients require in a manner that is in keeping with an appropriate financial model. Contact First4lawyers today for a free, no-obligation chat about your property needs and the type of representation you are seeking.
What is Islamic, Amanah and Shariah-compliant finance?
Because it is forbidden under Islamic and Shariah law to pay or receive interest, the process of re-mortgaging, re-financing or purchasing a property requires an alternative approach for people of the Islamic faith.
It is also important that banks involved in Islamic, Amanah and Shariah-compliant finance do not practice impermissible activities, such as providing finance to companies that produce or sell alcohol, gambling products, or non-halal meat.
Shariah conveyancing law is a quickly evolving legal area, and there are more and more banks now offering Shariah-compliant Islamic mortgages, which are carefully structured to ensure the bank or institution lending you the money will not profit from any interest.
Islamic mortgages can work in a number of different ways to ensure that interest is not paid or received by the lender. Islamic mortgage types include:
- Murabaha – This is a non-interest bearing loan, whereby there is an agreement between the buyer and the seller that an intermediary will retain the ownership of the property until the loan is fully paid. This is similar to a rent-to-own agreement.
- Musharakah – Under a Musharakah agreement, each party involved in the transaction shares in the profits and the risks. The bank or institution financing the purchase, re-mortgage or re-finance will stand to gain from actual profits earned, rather than interest, but they will also stand to share in any losses made on the property.
- Ijara – Mortgages based on the Ijara principle are similar to lease-to-own mortgages, in which you find a house to purchase, agree a price with the seller, and then agree to pay back the purchase price to the lender in monthly instalments – with the rent providing a profit to the lender, rather than interest.
While Islamic mortgages are designed to avoid the issue of interest being paid or received, they are not a shortcut to free lending from banks or financial institutions – there will always be something for the lender to gain by offering Islamic, Amanah and Shariah-compliant finance.
What are the costs involved in Islamic, Amanah and Shariah-compliant finance?
To ensure that the legal fees of the bank or financial institution are covered in a manner that is in keeping with Islamic law, most arrangements allow for legal disbursements to be deducted from the amount of finance being provided to you.
First4lawyers can provide assistance at every step of the process, ensuring that funds are received by the bank in a timely manner and that all activities are deemed permissible by Islamic standards.
I need to know whether parts of my property purchase or sale are Islamic, Amanah and Shariah compliant – what should I do?
By getting in touch with First4lawyers, you can gain access to a team of Islamic mortgage specialists with the knowledge and expertise to guide you through the process of a successful property purchase, re-mortgage, or re-finance.
We know Islamic, Amanah and Shariah law relating to finance and property, and we can provide you with all the information you need to make an informed choice about who you work with and what you do, and whether an Ijara, Murabaha or Musharakah agreement would best serve your needs.
Contact us today and we can support you at every step of the process.