The Home Purchase Plan (HPP), in line with Shariah law, does not charge interest. Instead the bank and customer are joint owners of the property and the homebuyer pays rent on the share of the property owned by Gatehouse.
The plan, available directly from the bank or through broker, One Option Finance, offers customers two options. They can choose from an ‘Acquisition and Rent’ plan, which is the equivalent of a conventional capital and interest mortgage or ‘Rent Only’ which is similar to an interest-only mortgage.
This is the first of a number of home buying products set to be launched by the Shariah-compliant bank. It said it was planning to roll out a wider range of products early in 2019.
The recently-launched HPP is a two-year fixed term product aimed at those looking to refinance and for homebuyers with a large deposit.
It has an initial rental rate of 3.19% which reverts to the bank’s standard variable rate (SVR), which is currently, 5.50% after the fixed term. The plan is available to help purchase 50% of a property’s value and there is no early settlement charge.
Charles Haresnape, CEO of Gatehouse Bank, said it hoped this pilot launch would bring additional competition to the home finance market.
“Due to our Shariah principles,” he said, “we will not be charging early resettlement charges on our Home Purchase Plans, which we believe will be a popular feature with many homebuyers.
“Gatehouse plans to offer competitive products together with human underwriting that will appeal to all homebuyers, Muslims and non-Muslims alike.”
