The UK’s only Sharia compliant retail bank has launched new home finance deals with rental rates starting at 3.59 per cent.
Islamic Bank of Britain (IBB) has introduced home purchase plans (HPPs) for consumers with a deposit of 35 per cent.
The offers are a discounted variable rental rate HPP at 3.59 per cent, until June 2015, and a fixed rental rate HPP at 3.79 per cent, fixed until June 30 2015.
HPPs are Sharia compliant, ethical mortgage alternatives, available to consumers of all faiths and beliefs.
Commenting on the launch, Imran Pasha, Head of Sales and Service, said, “This is the first time IBB has offered home finance to consumers with a 35 per cent deposit. The launch will benefit home buyers with a larger deposit, existing homeowners looking at re-financing deals or those seeking to release some equity from their property.
“They now have access to a competitive, Sharia compliant and ethical finance product; rental rates start at 3.59 per cent with a low product fee of only £399 and flexible terms.”
IBB’s move follows a recent rental rate cut by the Bank on its 80 per cent FTV HPP (20 per cent deposit requirement).Rental rates start at 3.99 per cent for the discounted variable rental rate HPP (discounted by 0.50 per cent until 30 June 2015), with low product fees of only £399 and flexible terms.
Furthermore, all of IBB’s HPPs, including its fixed rental rate products, allow customers to settle the finance in full at any time, without incurring an early settlement penalty charge.
As a Sharia compliant product, IBB’s HPP differs from a mortgage where the customer borrows money from a lender which is then repaid with interest. A HPP uses the Islamic finance principles of co-ownership (Diminishing Musharaka) with leasing (Ijara), where IBB and the customer buy the property as partners and the customer pays rent on IBB’s share in the property. At the end of the term, when all acquisition payments have been made and the finance has been settled, ownership of the property transfers fully to the customer. See the ‘How does a HPP work’ section below for a full explanation.
As an Islamic bank, IBB does not use any interest-bearing products to finance customer’s homes. Instead it uses its own funds, or the savings deposits from its customers, all managed entirely in accordance with ethical and Sharia principles.
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