Formerly known as the Islamic Bank of Britain (IBB), Al Rayan Bank is the UK's only fully Sharia compliant bank. Pioneering Islamic mortgages, finance and banking in the UK since 2004, Al Rayan Bank offers key financial services that comply with Islamic law. Compare Al Rayan Bank mortgages using the table below.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Like all other major high street
retail banks, deposits left with Al Rayan Bank are protected up to a total of
£85,000 under the Financial Services Compensation Scheme (FSCS).
As a Sharia bank, Al Rayan Bank offers many of the standard financial products and services you would expect to find at any other bank or building society, except that the terms of the offer are made on the principles of Islamic finance.
Customers are able to take out a mortgage, as well as open a current or savings account with Al Rayan Bank.
What is Islamic finance?
The foundation of all Sharia banking, or Islamic finance is based on the principles established within the faith of Islam. These rules or codes for doing business are taken from the teachings in the Qu'ran, and from the example set by the Prophet Muhammad.
Essentially, Islamic finance is based around the central belief that money has no intrinsic value. This means that lending and borrowing money should not return a reward for the lender or a penalty for the person borrowing. Put simply: to make money from money is against the principles of Islam. This means that interest, which is common in all other forms of banking, is not allowed.
Islamic finance is therefore based on sharing risk. While all banks aim to make a profit, including Islamic banks such as Al Rayan Bank, the risk of any trade is shared between the person providing the money or investment and the person providing the expertise. For example, instead of receiving interest on your savings at Al Rayan Bank, they will share the profits they make. Their rates advertised are based on the profits they expect to make.
Islamic finance is also a form of ethical banking, as a Sharia compliant bank will only trade or invest in organisations or products that comply with the religion's principles.
Despite Al Rayan Bank being the UK's only wholly Sharia compliant bank, Islamic banking assets have been growing fast. It is expected that Sharia compliant banks will have a bigger role to play in the future in the growth of economies around the world.
Al Rayan Bank mortgages
With Al Rayan Bank's Islamic finance mortgages, customers pay rent instead of interest on their mortgage (also known as 'home financing' in Islamic banking).
These mortgages, or home financing options, are also known as Hire Purchase Plans (HPP). In essence, the bank enters a joint ownership agreement with you – the more you pay in rent, the larger your share in the property grows.
So, instead of paying interest with a standard mortgage, you are actually paying rent on the bank's share of the property, which allows you to eventually fully own the property.
Use our comparison tables above to compare Islamic finance mortgages from Al Rayan Bank.
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