Early Settlement Premium FAQs

Is the Early Settlement Premium (ESP) Sharia compliant?

Yes, it is. The Early Settlement Premium has been carefully reviewed and approved by our Sharia Supervisory Committee. It’s designed to cover the Bank’s costs when a customer exits their agreement early - we do not make a profit from it.

Why is there a £25 administration fee for additional acquisition payments?

This fee helps cover the cost of processing your payment. As a Sharia-compliant bank, we’re allowed to recover reasonable administrative costs - but we don’t profit from this fee. If we ever did, we’d be required to donate the excess to charity.

Can I use my 10% allowance when settling my finance in full?

No, the allowance doesn’t apply when you settle your finance in full. However, you can still use any remaining allowance beforehand by making an additional acquisition payment.

Do I have to wait until 1 February to make an additional acquisition payment (AAP)?

Not at all. You can make AAPs throughout the year, including quarterly. If you’ve just switched to a new rental rate with an ESP, your first allowance will be based on your balance as of 30 September. From then on, it resets every 1 February.

Can I avoid the Early Settlement Premium by switching to the Standard Variable Rental Rate?

Yes. If you choose not to switch to a new fixed or discounted rate, you’ll automatically move to our Standard Variable Rental Rate - which doesn’t include an ESP or an AAP allowance.

Does the Early Settlement Premium apply to my current rental rate?

No, it only applies to new rental rates selected through the Product Switch process. 

How is the Early Settlement Premium calculated if I go over my AAP allowance?

The ESP is 2% of the amount you pay above your annual allowance.
For example, if your allowance is £10,000 and you make a £12,000 payment, the ESP would apply to the £2,000 excess,  which would be £40.

How will I know what my allowance is, or if an Early Settlement Premium will apply?

We’ll keep you informed at key points:

• In your Product Switch documents
• In your annual statement
• In the pre-expiry letter we send before your current rate ends

You can also contact us at any time to check your remaining allowance. And if an ESP is due, we’ll always let you know in advance.