[Biodp-admin] NUMBER ONE Success System

Tommy Lee noss1233 at gmail.com
Wed Aug 22 08:04:00 EDT 2007


100% Mortgages

Normally when a bank lends a customer money they want to protect their money
as much as possible, they do this by asking the borrower to pay a certain
percentage of the loan in the form of a deposit.

100% mortgages are mortgages that require no deposit (100% loan to value).
These are sometimes offered to first time buyers, but almost always carry a
higher interest rate on the loan.

UK mortgage process

UK lenders usually charge a valuation fee, which pays for a chartered
surveyor to visit the property and ensure it is worth enough to cover the
mortgage amount. This is not a full survey so it may not identify all the
defects that a house buyer needs to know about. Also, it does not usually
form a contract between the surveyor and the buyer, so the buyer has no
right to sue if the survey fails to detect a major problem. For an extra
fee, the surveyor can usually carry out a building survey or a (cheaper)
"homebuyers survey" at the same time. [1]

The Sharia law of Islam prohibits the payment or receipt of interest, which
means that practising Muslims cannot use conventional mortgages. However,
real estate is far too expensive for most people to buy outright using cash:
Islamic mortgages solve this problem by having the property change hands
twice. In one variation, the bank will buy the house outright and then act
as a landlord. The homebuyer, in addition to paying rent, will pay a
contribution towards the purchase of the property. When the last payment is
made, the property changes hands.

Typically, this may lead to a higher final price for the buyers. This is
because in some countries (such as the United Kingdom and India) there is a
Stamp Duty which is a tax charged by the government on a change of
ownership. Because ownership changes twice in an Islamic mortgage, a stamp
tax may be charged twice. Many other jurisdictions have similar transaction
taxes on change of ownership which may be levied.

An alternative scheme involves the bank reselling the property according to
an installment plan, at a price higher than the original price.

All of these methods are still compensating the lender as if they were
charging interest, but the loans are structured in a way that in name they
are not, but they share the financial risks involved in the transaction with
the homebuyer. See Islamic finance.
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