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Sharia compliant loans open to expat buy-to-let applicants
| Published: | 23 Aug at 6 PM |
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As British banks cut back on expat buy-to-let mortgages, there’s one lesser-known way to secure a loan.
As the number of British banks offering buy-to-let mortgages to British expats working overseas decline still further and those still in the market now cherry-picking applicants, getting a loan whilst still overseas is a tough task.
With only one or two high street banks still serving this niche market, the few lenders still operating are tightening their requirements and restrictions, thus excluding all but a privileged few high-end borrowers. Fortunately, there’s another way for expats to finance property purchases, based on a totally different way of lending. Sharia compliant finance is the new kid on the block for British expats, many of whom may not understand exactly how it works.
Islamic law forbids lenders from making money directly by offering loans, with shared ownership purchase plans taking the place of interest-bearing loans. In the case of a property mortgage, the buyer pays ‘rent’ to the lender, calculated on the share of ownership. Over time, the buyer gradually buys into the property by means of an additional premium for the term of the mortgage. Sharia compliant Gatehouse Bank’s website has two videos which explain in easily-understood terms exactly how it works, with the bank’s CCO Paul Stockwell adding that Sharia-compliant financing aren’t just for those of the Muslim faith, they’re for everyone, no matter what their beliefs.
Other advantages include more relaxed terms, mortgages for those with salaries as low as £25,000 who’re seeking less expensive properties and services for expat applicants from countries normally blocked by conventional lenders. In addition, especially for buy-to-let loans, Sharia lenders may be willing to fund limited companies, yet another of the UK’s restricted markets.
As the number of British banks offering buy-to-let mortgages to British expats working overseas decline still further and those still in the market now cherry-picking applicants, getting a loan whilst still overseas is a tough task.
With only one or two high street banks still serving this niche market, the few lenders still operating are tightening their requirements and restrictions, thus excluding all but a privileged few high-end borrowers. Fortunately, there’s another way for expats to finance property purchases, based on a totally different way of lending. Sharia compliant finance is the new kid on the block for British expats, many of whom may not understand exactly how it works.
Islamic law forbids lenders from making money directly by offering loans, with shared ownership purchase plans taking the place of interest-bearing loans. In the case of a property mortgage, the buyer pays ‘rent’ to the lender, calculated on the share of ownership. Over time, the buyer gradually buys into the property by means of an additional premium for the term of the mortgage. Sharia compliant Gatehouse Bank’s website has two videos which explain in easily-understood terms exactly how it works, with the bank’s CCO Paul Stockwell adding that Sharia-compliant financing aren’t just for those of the Muslim faith, they’re for everyone, no matter what their beliefs.
Other advantages include more relaxed terms, mortgages for those with salaries as low as £25,000 who’re seeking less expensive properties and services for expat applicants from countries normally blocked by conventional lenders. In addition, especially for buy-to-let loans, Sharia lenders may be willing to fund limited companies, yet another of the UK’s restricted markets.
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