The newly launched lender told Specialist Lending Solutions it wanted to focus on the re-finance market and that it would not shy away from those loans which were non-performing.
It also revealed that it was considering a banking or credit union licence and that it expected its main source of growth to initially come from outside the Muslim community.
Ethical lending, charity donations
There has been much discussion over default terms within the bridging market this year, with concerns raised that some lenders were not being clear to borrowers about charges and penalties.
However, Offa head of investments Haris Akhtar said the lender was not going to take advantage of people in difficult situations.
“Our pricing is going to be fully transparent. We are ethical lenders, we have moral obligations, we ultimately want to be fair lenders,” he said.
“As a Sharia-compliant lender we have to fit in a lot more ethical responsibility. We have to donate a percentage of profits to charity.
“For default borrowers we will charge a default premium, but we have to donate that to charity, so ethical responsibility is very much an element of our operation.”
And he added that re-financing defaulted loans would be a key part of the lender’s business plan.
“Where there is an agreement with the existing lender we will try to facilitate a re-finance,” Akhtar said.
“A lot of lenders shy away from defaulted loans, but we see that as being a good space to be in.”
Akhtar agreed the bridging market was particularly competitive with rates coming down and noted the lender would need to be rate conscious to attract business, but added it would not “depress underwriting standards” to do so.
Broker portal planned
Akhtar was clear that the broker market is an important one for it to follow with targets for a ten-day application-to-drawdown process, with the intention to then further reduce that.
Head of operations Bilal Ahmed is already in contact with many firms and a broker portal is also being planned for its overall platform.
“The aspiration is to start within real estate lending and the development world but extend that into auto and unsecured finance,” he continued.
“We’re building a technology platform which will allow us to roll out those products over time.
“And we’re looking to potentially get a banking licence or credit union licence which will give us a lower cost of capital.
“Combining private funding with a credit union licence and the potential leverage we can use is much higher because we can take regulatory deposit protection,” he added.
Conventional bridging lending
Perhaps slightly surprisingly, the firm said it was taking a pragmatic approach and its initial growth was likely to come through the more conventional market, rather than the Muslim population.
“We are actively trying to target that conventional market and doing so by attractive referral rates to brokers,” Akhtar said.
“We should be able to get good deals flowing through our desk from these brokers. And we expect the Muslim proportion of borrowers will increase but that will be through word of mouth, marketing and referral action in Islamic finance.
“The problem has been that Islamic finance has always been more expensive, so we need to be a competitive provider and have great service.”
The Muslim population is currently around eight per cent of the UK population and growing.
Offa plans to target some of the main geographic areas of this population including Birmingham, Manchester and Leeds, and this will be reflected in its lending strategy.
“As a result, we will focus on regional centres where the return is more interesting. We’re not really focusing on London and the South East,” Akhtar concluded.