Frequently Asked Questions

To keep things easy and simple for you, below we’ve listed some of the most frequently asked questions.

What is Ethical finance?

Ethical Finance is based on sound moral principles and an etiquette of fair and ethical dealing. There is an established consensus on what constitutes Ethical Financing principles and the positive role it plays in society.

How is Ethical Finance different to Conventional Finance?

Unlike traditional corporate structures where there can often be a disconnect between shareholder profit maximisation and corporate social responsibility, Ethical financing puts emphasis on society at large as the key stakeholder. 

One of the main differences is the prohibition of providing finance which support potentially socially irresponsible activities (e.g. associated with tobacco, alcohol, adult entertainment, defence & weapons, gambling etc).

Ethical financing also prohibits the charging or receiving of interest and the profiting from another’s misfortune such as when a customer is loss making. For instance, we will not take a draconian approach to late payments and will instead make try to make a genuine effort to understand the customer’s circumstances before taking immediate action. In the case where we do charge default penalties this will go to charity and not for our own profit.

The customer always knows exactly how much to pay, and this does not deviate depending on external market conditions. Everything is agreed in an open and transparent manner from the outset. 

Some products allow for risks to be aligned and the sharing of profit and loss – see our Shared Risk Ethical Finance product (coming soon).

We also donate a share of our profits to various charities including WaterAid, Cancer Research, Islamic Relief and Donate to Educate.

Is Ethical Financing only provided by foreign Islamic Banks and only for Muslims?

No, Islamic Banking & Ethical Financing is popular across both Muslim and non-Muslim demographics and operates in both Islamic and Non-Islamic countries. In fact, many British Banks offer financing designed in accordance with Islamic Financing principles.

We are however the first short-term bridge finance provider in the real estate sector who’s products are compliant with standard of ethics found in Islamic Finance.

How does OFFA ensure its finance products meet ethical standards?

We have a Sharia Supervisory Board (SSB) which comprise qualified Ethical and Islamic Finance experts and scholars. The SSB remains independent from the Platform but are active in overseeing and monitoring its operations. We are also regularly audited by SSB appointed auditors. The auditors regularly engage in gathering evidence, performing in depth analysis, and reporting their findings to the SSB. They have complete and full access to all our systems, employees, and any transaction-related documentation.

If interest isn't charged, how does commercial property finance work in practice?

The method we use removes any uncertainty in the transaction and the fixed profit element is agreed and capped from the outset, thus protecting the customer.

The Islamic Financing structure we currently use is termed “Commodity Murahaba” which is based on a Deferred Sale and Purchase of a Commodity (usually a Metal).

The difference between the Sale and Purchase Price represents the cost of our Finance to the Customer. Neither the Customer, nor Offa as the Seller, actually take any risk of price fluctuation in the underlying Commodity. To start, Offa buys a Commodity at the spot price in the market today and transfers the Commodity Contract to the Customer at an agreed mark up. The Customer immediately sells the Commodity Contract for Cash at the same spot price today. The Cash Proceeds represent the Finance from Offa to the Customer. Offa manages this entire process.

From the outset the Customer agrees to repay the Cash Proceeds from the Sale of the Commodity with a Fixed Profit Margin to the Seller (representing the Seller’s cost of Finance) over an Agreed Period (the Term of the Loan).

We will soon be launching our Shared Risk Ethical Loan productwhich is based on a Musharakah (joint venture partnership investment).

If OFFA doesn't charge interest, why does it advertise'%' rates?

Although we operate a fixed profit element, we disclose the % rates that these would translate to, had the financing been provided as a standard loan which expired within the agreed term of repayment. This is to allow our clients the ability to compare with ease our products with alternative financing provided by conventional lenders.

What is meant by the term ‘FTV’ and ‘FTC’?

Both FTV and FTC are ratios which measure the amount of finance made available in each transaction.

FTV is the Finance to Value ratio and is calculated based on the amount of capital we have invested against the market valuation of the underlying property.

FTC is the Finance to Cost ratio and is calculated based on the amount of capital we have invested against the total cost or purchasing the underlying property.

You can view the maximum FTV and FTC amounts we offer for our various products on the Products Page.

Any shortfall will need to be sourced by the customer themselves.

Why are there two sets of solicitors involved?

By outsourcing representation of ourselves and the client to independent and qualified third parties, this ensures that any disputes are handled in an open, fair and transparent manner and minimises conflicts of interest.

Can I change my mind and sell the property?

Yes – our customers are free to sell at any time.

What is the Process and what happens after I apply?

We encourage initial enquiries via telephone (0121 667 7291) or email (enquiries@offa.co.uk) to best understand the right financing solution for your needs.

If you already know which product you wish to apply for please fill out the Enquiry Form on our Contact Us or alternatively download and email us the Quick Enquiry Form.

After performing an initial case assessment, we may decide to proceed by providing an Indicative T&C Agreement. You will need to return this together with other forms which you can access on our website.

As per this agreement you agree to fund subsequent costs relating to the application process, which includes the cost of obtaining a property valuation and instructing solicitors (subject to you passing our initial due diligence checks).

Once we have performed all our checks and ensured everything is in order, finance is made immediately available.

How long does the process take?

Currently you can expect to receive financing within 2-3 weeks of applying.

We aim to release financing at the earliest opportunity, and on occasion this may be before all solicitor documents are received (which may take a further 3-5 weeks).

We are exploring initiatives to streamline and expedite this process further which will reduce the application to financing period to 1-2 weeks.

How much finance can I have and how much will it cost me?

This is dependent upon several factors including your individual circumstances, the valuation of the property and the finance product you want. We are always happy to talk you through the different options.

Am I able to make early/over payments?

Yes. However, any overpayments will not be credited to your account until the maturity date of the then current transaction (or break point), in line with the finance arrangement.

What about Property Valuation & Survey Reports?

Once we have performed an initial assessment we will send you indicative terms which are subject to the valuation of the property. By agreeing to these terms you undertake to pay the valuation fees.

After receipt of payment we will instruct a qualified Surveyor to prepare a Commercial Red Book Valuation Report.

This independent valuation will allow us to decide whether the property allows for an adequate level of security relative to the financing amount (i.e. meets necessary FTV % criteria).

Do I need to take out building insurance?

Yes – a condition of any finance provided is that suitable building insurance is in place on completion.

Does OFFA provide financing to both individuals and companies?

Yes – our customers can be individuals, sole traders, partnerships, limited companies, LLPs and on & off shore SPVs.

In addition to UK residents, are products also available for Expats and International clients based overseas?

Yes – we operate a flexible and inclusive approach and all customers will be considered.

How is the Financing Structured?

The Islamic Borrowing structure we use is termed “Commodity Murabaha” which is based on a Deferred Sale and Purchase of a Commodity (usually a Metal).

The difference between the Sale and Purchase Price represents the cost of our Finance to the Borrower. Neither the Customer nor Offa actually take any risk of price fluctuation in the underlying Commodity.

It works like this – First, Offa buys a Contract on the Commodity at the market price today and transfers the Contract to the Customer. The Customer immediately sells the Contract for Cash at the same price.

The Cash Proceeds represent the Finance from Offa to the Customer. Offa manages this entire process. The Customer agrees to repay the Cash Proceeds from the Sale of the Commodity with a Fixed Profit Margin to the Seller (representing Offa’s cost of Finance) over an Agreed Period (the Finance Term).