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Lloyds TSB offers home finance deal for Muslims

Lloyds TSB is introducing an Islamic home finance product to help Muslims buy homes according to the principles of ijara.

Instead of lending money, the bank buys the property, contributing up to 90 per cent of the purchase price. The customer pays the remaining 10 per cent up front and the outstanding sum over an agreed term, together with a rental payment.

The deal is an alburaq home finance product from ABC International Bank. It is being piloted alongside the Islamic current account launched by Lloyds TSB last month in selected branches across the UK.

Under the principles of ijara and diminishing musharakah, Muslims cannot take out traditional interest-based mortgages.

The bank consulted with a board of Islamic scholars who have advised on aspects of Islamic finance law.

Lloyds TSB Islamic Financial Services director Mark Austin says: “Three-quarters of the country’s Muslims want banking services that meet the needs of their religion and this product should help bring a new generation of homeowners on to the property ladder.”

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