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November 2, 2008

NatWest introduces Sharia-compliant mortgage

Permalink: NatWest introduces Sharia-compliant mortgage
by Lin Freestone

NatWest introduces Sharia-compliant mortgage

In response to customer demand, NatWest bank has launched its first mortgage product compliant with Islamic Shariah law. In accordance with Shariah law, the product will not charge interest.

Available from NatWest Business Banking, the product is for commercial properties and is specially tailored to the needs of the two million Muslims in the UK.

More than 40 relationship managers have been trained to serve the needs of Islamic customers, who will join specialist diversity banking teams.

The product adopts the Murabaha principle (cost-plus or deferred sale) under which the bank buys the property and immediately transfers it to the customer at a profit.

The price paid by the customer to the bank is repaid over a deferred period and consists of the price paid by the bank, less any customer deposit, and an element of profit for allowing repayment over time.

The minimum advance is usually £26,000, with no maximum. The maximum payment term is normally 25 years, with a minimum of one year. Payments are fixed for the entire term.

According to the chief executive officer of NatWest’s Business Banking team, Paul Lynam, by introducing a Shariah-compliant commercial mortgage, NatWest is demonstrating its commitment to this growing community, and the broadening of its focus on this market.


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