Settling your home finance early could boost your retirement savings.
According to the Office of National Statistics, in the financial year to April 2016, home finance was one of the top home expenses for UK households. As it is such a big expense, settling it over a shorter period will potentially save a significant amount of money – if it can be managed without over-stretching your finances.
Research from Hargreaves Lansdown shows that around 31% of 55-65 year olds are still paying their home finance, yet many are able to clear the balance within that time. Additionally, 58% of those who are now home finance free settled it in their 50s. If these people were to redirect their equivalent payments into long term savings products they could significantly boost their funds for retirement.
With a Sharia compliant discounted variable rental rate Home Purchase Plan from Al Rayan Bank, additional acquisition payments can be made in the month of each quarterly rent review. The minimum overpayment is £4,000 with an administration fee of £25. Even infrequent overpayments could make a big difference in the long run, helping you to settle the finance early, and potentially redirect funds towards your retirement savings.
To help with your savings needs, Al Rayan Bank offers some of the highest expected profit rates in the country. As a rule of thumb, the longer you can put money away for, the higher your returns will be. For example, our 36 month Fixed Term Deposit currently has an expected profit rate of 2.17%, the highest expected profit rate of any Al Rayan Bank savings accounts and one of the reasons we were the winner of the Best Fixed Account Provider in the Moneyfacts awards 2017. There are other saving options available, including notice accounts and ISAs. You can view our full range here
Alternatively, you may wish to invest in property using our Buy To Let Purchase Plan, which offers a Sharia compliant way to purchase a buy to let property. It works using the Islamic finance principles of Co-ownership (Diminishing Musharaka) with Leasing (Ijara). More information can be found here
If you’d like to find out more about Al Rayan Bank’s Home Purchase Plan range, which includes home finance, buy to let home finance and a ‘fees assisted’ home finance for customers wishing to move their home finance to Al Rayan Bank, please visit our website
YOUR HOME MAY BE AT RISK IF YOU DO NOT KEEP UP THE PAYMENTS ON YOUR HOME PURCHASE PLAN