The expansion comes just one year after it launched the UK’s only Home Purchase Plan to be backed by the Government’s Help to Buy guarantee scheme, and two months after the bank appointed a dedicated Intermediaries Specialist to grow the volume of retail assets it services through the mortgage intermediary market.
Designed to offer more choice to customers, Al Rayan Bank’s enhanced HPP range enables home finance to be secured with a range of deposits:
- New 60% finance to value: requires a 40% deposit, with a fixed rental rate of 3.49% and a discounted variable rental rate of 3.29%
- New 70% FTV: 30% deposit, with a fixed rental rate of 3.79% and a discounted variable rental rate of 3.59%
- 80% FTV: 20% deposit, with a fixed rental rate of 4.19% and a discounted variable rental rate of 3.99%
- 90% FTV requires a 10% deposit, with a fixed rental rate of 4.99%
Rental rates apply until 31 December 2017 for the 60%, 70% and 80% FTV HPPs and until 31 December 2018 for the 90% FTV HPP. All rental rates will revert to the Al Rayan Bank Variable Rental Rate, which for Home Purchase Plan is BBR +3.99%.
Al Rayan Bank’s Home Purchase Plans are open to all customers, regardless of faith. As it is forbidden to pay or receive interest under Islamic law, HPPs provide ethical home finance that is fully Sharia compliant.
Unlike conventional mortgages where money is borrowed from a lender and repaid with interest, HPPs are based upon the Islamic finance principles of a Co-Ownership Agreement (Diminishing Musharaka) with Leasing (Ijara). Customers buy the property together with the Bank and pay rent on the Bank’s share. Over time the customer’s share in the property increases and at the end of the finance term, customers own the property outright.
Additionally, as an Islamic bank Al Rayan's administration fees simply reflect the effort of its employees and the costs incurred by the Bank. This means that they are lower than many of the administration fees charged by conventional banks. The administration fee for the 60%, 70% and 80% FTV HPPs is £399 and for the 90% FTV HPP it is £999. As with all of Al Rayan Bank’s home finance products there are no penalties for early settlement, even within a fixed rate period.
