Shazad Mohammed is a 28 year old engineer, working at Reuters Ltd since graduation. Although he has been working for the last five years, he has never taken out a mortgage due to the prohibition of Riba and other elements that contravene Islamic economic principles. Thus, he has lived with his parents until recently.
Why did you never take a mortgage?
“For me a conventional mortgage was never an option, so I had little choice but to stay at home with my parents (not that I’m averse to this). However, based upon family growth and changes in life, moving out would have been inevitable, which means at some stage renting would have been a necessity. When I heard about Islamic finance being launched in the UK, I decided to explore the possibility of taking out a financial package if all necessary Islamic standards were met.
I was sceptical at first and couldn’t really understand how it was Islamic and what made it different to a normal mortgage. I researched the products available in the market and sought clarification from reliable sources who were able to apply the details of the products against the necessary principles, enabling me to arrive at a decision on whether or not it was permitted to engage with the services that were now available.
Having gone through this process, and only after being satisfied, I started to look for a property. The property I found was a leasehold property. At this stage I was informed that HSBC, my arranged mortgage provider, did not cater for this type of arrangement for leasehold buildings. I had hit a blank wall.”
How did you hear about alburaq?
“I spoke to a friend who mentioned alburaq and so I decided to explore the products they offered. I was surprised to find a Diminishing Musharaka product. Before researching Islamic finance, I knew relatively little about the details. However, on studying it further, I gained greater depth and became familiar with the Ijara model scheme; hence, on learning about Diminishing Musharaka, I realised this was a form of the Ijara model I had investigated.
alburaq’s Diminishing Musharaka is more innovative than the standard Ijara contract offered by HSBC, as this model gave me real ownership in a true sense (with HSBC, ownership is only transferred once the total sum has been paid). Another advantage of going through alburaq was to be able to contract over a leasehold building and not just the standard freehold.”
How did you find the service?
“The service I received was friendly and personal. I had many questions which were answered either immediately or within a few days by the team. I had a few concerns regarding certain sections of the contract, such as the ownership levels and the payments. However, my queries were answered either in person or through leaflets, but at every stage there was a personal touch.”
Any problems?
“A few sticking points always tend to emerge in any deal, which I understand is part of the general property buying experience and not necessarily a result of taking Islamic finance. Interestingly, a few weeks after my purchase, I wanted to undertake some refurbishment work in my flat which required the landlord’s consent. As the bank has a share in ownership, I needed to involve the bank with this, which seemed unusual. I do understand that with the different structures necessary to provide proper Islamic finance, such situations will occur. I should add that the bank has been most helpful through the process.
Overall, I commend the excellent customer services displayed by the alburaq team. They took me seriously and kept me in the loop at each point of the process. I’m very pleased at being able to afford accommodation to live in - with renting not being the only option - and at the same time contracting within the boundaries of Islamic economic principles.”
