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Pastimes : The Hot Button Questions:- Money, Banks, & the Economy

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To: maceng2 who wrote (268)	7/1/2003 9:08:40 PM
From: maceng2	Read Replies (1) of 1417

HSBC to offer 'Islamic mortgages' ananova.com HSBC is to become the first UK high street bank to offer mortgages and current accounts designed to comply with Islamic law. The facilities will allow the almost two million Muslims in the UK to buy a house or use a mainstream bank without having to pay or receive interest, which is prohibited in Islamic law. In a traditional mortgage customers borrow the money needed to buy a house from the bank or building society and pay the sum back with interest. But under HSBC's new home finance scheme, the bank will buy the property outright on the customer's behalf and lease it back to them for an agreed term - usually 25 years, the same period as a traditional mortgage. The customer will then pay a monthly rent instead of interest as well as a contribution towards the price of the property and become the official owner of the house after their final payment. It is also offering an Islamic current account in which customers will not receive any interest on their balance but equally will not have to pay interest on credit. The account also has no overdraft facility. While around 70% of the Muslim-owned homes in the UK are financed through a traditional mortgage many feel bound to rent or save up until they can buy a property outright. Iqbal Asaria, of the Muslim Council of Britain, said: "The launch of these Islamic finance products by HSBC is welcome news for many thousands of Muslims who regularly battle with their consciences when it comes to making financial decisions." Previously buyers using Islamic mortgages effectively paid stamp duty twice, once when the initial purchase was made and again when they took over the property from the bank, but changes announced by Chancellor Gordon Brown in the latest budget eliminated the hurdle. The facilities will be available from July 14 at four branches - in Bradford, Cardiff, Birmingham and London - and at 25 sites by the end of September. A spokesman for HSBC said the facilities will also be available to non-Muslims.

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