"We’ve launched a home purchase plan which requires just 5% deposit to help first-time and existing homebuyers get into the property market"
The HPPs will assist with up to 95% of the financing required for residential properties and are designed to replace the Help to Buy: HPP guarantee backed product which was withdrawn end of December 2016.
Al Rayan says it is the first and only Islamic bank in the UK to offer support to buyers who can afford the payments on home finance but may have only a small deposit saved.
Rental rates for 90% finance to value are fixed at 4.49%, and 4.99% for 95% FTV until 30th September 2021.
Keith Leach, chief commercial officer at Al Rayan Bank, said: “Following the closure of the Government’s Help to Buy scheme in 2016, we’ve launched a home purchase plan which requires just 5% deposit to help first-time and existing homebuyers get into the property market with a smaller deposit.
“The average size of the deposit required for home movers has increased over 90% over the last decade, making it increasingly difficult for first time buyers. These new products offer consumers an affordable and ethical way of breaking into, or moving up, the property ladder.”
Al Rayan Bank’s Home Purchase Plans use the Islamic principles of Diminishing Musharaka (co-ownership) and Ijara (leasing), which means that the customer and the bank buy the property together.
The customer’s monthly payment is made up of two elements - an acquisition payment, the payment made to acquire Al Rayan Bank’s share in the property, and a rental payment, which is the charge for renting Al Rayan Bank’s share in the property. At the end of the term when all finance has been settled, the customer owns the house outright, without ever paying interest.
