A few years ago, an Islamic home buyer would have found it almost impossible to get a mortgage compliant with Islam’s sharia law, which prevents the faithful from paying interest.
Today, sharia-compliant loans are a growing market. In a report last month, credit-rating agency Moody’s Investors Service said the global Islamic finance market has increased about 15 percent in each of the past three years and is now worth about $700 billion worldwide.
All the largest lenders, including Citigroup, HSBC, and Deutsche Bank, have affiliates devoted to Islamic finance.
An Islamic mortgage looks like a lease-to-own deal. The bank, not the borrower, buys the house. The borrower makes installment payments to the bank for a period of years, at the end of which he or she gets the title to the house.
Source: USA Today, Paul Wiseman (03/27/08)
I’m really fascinated by this. Sounds like an advantage over other borrowers. Are their loans or purchase prices larger to cover what would have been interest? Can anyone direct me to a mortgage consultant with this specialty?