ABC GroupABC Group

ABCABC's Alburaq Islamic home finance product, developed in cooperation with Bristol & West, part of the Bank of Ireland Group, has some 12 different options. It ranges from the basic mortgages to buy-to-let and non-certification options. The Alburaq products are available either directly or through selected independent financial advisers, or through the Islamic Bank of Britain and Lloyds/TSB.

Keith Leach, head of Alburaq at ABC International Bank, said the rent for the buy-to-let mortgage product will be fixed until Sept. 30, 2008 at a total rental rate equivalent to 6.49 percent per annum. Thereafter the rate will be calculated every 6 months, on the basis of 6 month LIBOR (London Interbank Offered Rate) (on Sept. 1 and March 1) plus a fixed margin of 1.79 percent (which is the guaranteed margin for the remainder of the term).

Under the buy-to-let scheme, customers can get finance of up to 85 percent of the value of the property, or the purchase price (whichever is lower). Investors can build a portfolio of up to 15 properties and there is no tie-in, which means the mortgages can be redeemed fully paid at anytime without any penalties. Customers can also make additional over payments prior every six months. Customers can also take out a buy-to-let mortgage in addition to an existing home finance agreement or mortgage.

Applicants must be aged 21 or over (if a joint application, at least one applicant must be over 21). There is no maximum age. Applicants must have a minimum of 12-month previous Islamic home finance or mortgage borrowing experience within the last 5 years.

Applicants must be resident in the United Kingdom. The minimum finance amount is GBP15,001 for purchases and GBP25,001 for refinances. The application may be for up to 75 percent of the value of the property and details of the income and expenditure are not required. A minimum personal income of at least GBP15,000 is required between 75 percent-85 percent of the property value. The property must be let on an assured shorthold tenancy basis.

The Alburaq Islamic mortgage is based on the principle of Diminishing Musharaka, which combines the concept of co-ownership of the property between the bank (the provider of the funds) and the customer (the purchaser of the property) with a diminishing rental payment by the customer for the equity portion of the bank plus a portion towards capital repayment over a given tenor. As soon as the capital is repayed, the title of the property is transferred to the customer.

"Our new fixed priced buy-to-let product is the first time we have offered a fixed price alternative to a conventional interest mortgage. With the Muslim finance market growing all the time, we are determined to offer a comprehensive array of products that provide our customers with the same choices that the mainstream market offers. This fixed rate buy-to-let product is the latest in our growing portfolio," Leach said.

The total Islamic mortgage market in Britain is set to rise dramatically by 2009 to reach a projected GBP1 billion. ABC International Bank's Alburaq division has approved over GBP100 million worth of residential mortgage business since its started operations at the end of 2004. ABCABC expects this business to steadily increase over the next two years.

Earlier this year, Alburaq also launched an Islamic mortgage designed specifically for Muslim and other professionals based in the UK such as doctors, dentists, opticians, pharmacists, vets, teachers, barristers, solicitors, accountants, actuaries, architects and chartered surveyors.

© Arab News 2007

 

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