Islam is an old religion based on principals of sharing and fairness. These principles govern all parts of Islamic life, even money. They prohibit making money from money – basically, charging or paying interest. They also prohibit investing in companies that are involved in alcohol, pornography, gambling or tobacco.

As a result, if you were a Muslim in the UK, you  were unable to get a mortgage to buy your own property as mortgages essentially involve interest. Bank accounts and investments were problematic as well, because when you put your money into the bank you often have no say in how it is invested.

Fortunately, if you are a Muslim living in Scotland, things are starting to change. Several banks now offer Islamic, or interest-free, mortgages which are available to everyone, Muslim or not. These mortgages work in one of two ways:

Ijara (lease to own):

The property you select is bought for you by someone (usually the bank). The bank then charges you a monthly rate. This charge goes towards paying off your home, but also includes a ‘rent’, or money to live in the house until you fully own it. The title deed is in the bank’s name until you have paid off the full amount. Your rent may change, going up or down.

Musharaka (deferred sale finance):

The bank buys the property on your behalf, but the home is registered in your name. The bank then sells the property back to you, at a higher cost, on fixed monthly payments.

Islamic mortgages came into use in 1975 but have only recently become common in UK banks. Fortunately, many banks are adding other halal services as well. Ethical banking and investments have given people more control over where their money is spent. One bank has even come up with a halal form of insurance.