Diversity of UK market highlighted by Islamic mortgages

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Diversity of UK market highlighted by Islamic mortgages

The range of mortgage products introduced in the UK to stimulate buying has seen an unusual addition in the form of the Islamic mortgage.

Based on concepts developed through Sharia law, an Islamic mortgage marks a specialised product for the UK property market compared to the more standard offerings of fixed-rate and tracker mortgages.

According to What Mortgage magazine, the differences are mainly contractual, with the loan being slightly more expensive than a standard mortgage and operating similar to paying back a lease. A member of the religion buys a property and then rents it out, charging not only for tenancy but also capital through a monthly fee.

"They have become slightly more popular, but only because they didn't exist until several years ago," said Ben Wilkie, editor of the magazine.

He added: "It's very much a part of the market and helps the people that need that sort of help."

Meanwhile, Leeds Building Society, in response to several rate adjustments from other lenders, announced today (July 29th) a fees-assisted two-year fixed-rate buy-to-let mortgage available from 5.14 per cent.

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