In this brief guide, we are going to discuss the HSBC Islamic mortgage and all the news surrounding it.
What is the HSBC Islamic mortgage?
The HSBC Islamic mortgage is no longer being provided by HSBC.
A news report on the matter stated
“HSBC has stopped offering Sharia compliant mortgages to new customers in the UK from today.
The bank will cease to offer Sharia complaint products and services in the UK, the UAE, Bahrain, Bangladesh, Singapore and Mauritius. Existing customers will not be affected by the changes.
Instead, the lender will focus its Islamic finance offering to customers in Malaysia and Saudi Arabia, and maintain a limited presence in Indonesia.
A spokesman for the lender said its decision to pull Islamic mortgage for new customers is down to a “strategic review of its business.”
The lender first started offering Islamic finance in 2003, but added that Sharia mortgages are a small business line for it in the UK.
The lender’s Islamic arm, HSBC Amanah, has around 3,000 home finance customers. The book is currently worth £350m. HSBC’s total UK mortgage portfolio is in excess of £70bn.
Islamic law prevents Muslims from paying or receiving interest. Under Islamic mortgages the bank technically buys a property which is rented to the customer on a 25-year term until sufficient payments have been made to match the purchase price, plus a small profit.
Following the restructuring, HSBC will retain 83% of the Group’s Islamic business revenue.
According to Moneyfacts, other providers who still offer Sharia compliant products include the Islamic Bank of Britain, United Bank UK, Alburaq and Ahli United Bank UK.”
Looking to get an Islamic mortgage? Use a mortgage broker
You may want to use an independent mortgage broker to help you get a mortgage on your new home.
Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases.
This could be over 11,000 mortgage products. This may have some advantages rather than going directly to a mortgage lender.
A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you based on your mortgage affordability.
After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle.
This will allow you to shop for your home as more estate agents and sellers may take you seriously and it will also give you confidence that your mortgage is indeed a possibility before you make a full mortgage application.
Once you have found a home you want to buy and are satisfied with the mortgage offer for your mortgage then the mortgage broker will then look to get you a mortgage offer.
This will come with a key facts illustration document that details the features of your mortgage including how much you will pay per month.
It will also contain information on if there are any limits such as early repayment fees, or annual overpayment limits.
If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer.
Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it.
They will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer, and set a completion date with the seller or their conveyancer.
This will then bring an end to the conveyancing process, at which point you will receive the keys to the house and move in.
In this brief guide, we discussed the HSBC Islamic mortgage and all the news surrounding it.
If you have any questions or comments please let us know.
If you are in need of advice about your money and you live in the UK then you may contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.