Moneymagpie

A few months back I wrote about our mortgage, explaining how I had refused to re-mortgage when our deal ran out last summer, because of what I considered were outrageous and exploitative arrangement fees. Back then it was around £2000. Since then they have come down – a little – to an average of £997, according to Moneyfacts. 

At the time I was pretty clear that I believed that these charges bore absolutely no relationship to what it actually cost the banks to process these mortgages. They were basically just being opportunist and attempting to squeeze every last penny out of hard pressed homeowners. 

Well a recent meeting with Islamic Bank of Britain (www.islamic-bank.com)  ahead of the launch of its first mortgage product in Scotland has shown up just exactly how much the big banks are ripping us off with these charges. 

To qualify as Islamic products have to conform to certain rules. One of which states that the provider can’t charge any more as a “fee” – in this case a fee for arranging a mortgage – than it actually costs to set up that mortgage. So what is the fee for the IIB mortgage? 

It‘s £299. 

That means that the average mortgage provider is raking in at least £600 more than it costs to set up a mortgage.

That’s £600 for each and every mortgage customer. I repeat it’s outrageous.

It’s tempting to go on and question why the banks – which let us not forget are now being propped up by us all as taxpayers have learnt nothing from all their past attempts at ripping off their customers (bank charges and payment protection insurance being just two examples) but I will restrain myself.

Instead let me say this. You do not have to be Muslim to take out an Islamic mortgage, anyone can. The equivalent interest rate on the IIB mortgage is 3.99%. And if you want any further proof that IIB do things differently then think about this – any money they take in by way of penalties for late payment of mortgage repayments they donate to charity.