Moving house? It pays to plan ahead

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There is a saying that a week is a long time in politics, never has that been more true than in recent times. Images of new Prime Minister Theresa May taking up residence in her new home in Downing Street have been screened around the world over the last month. Whilst the experience of moving to 10 Downing Street is not one that most of us will ever experience, moving to a new home certainly is.

According to a study compiled by Post Office Money and the Centre for Economics and Business Research (Cebr) last year, the costs associated with moving home for an average family reached nearly £12,000. This huge sum includes moving costs, such as stamp duty, estate agent and surveyors' fees and removals. It does not include the cost of the deposit contribution for the property or the associated home finance arrangement fees. If you’re saving to buy your first home, or taking the next step on the housing ladder, it pays to plan ahead and to take all of these costs into account.

In order to make Sharia-compliant home finance more affordable, we have recently reduced the rental rates on our entire Home Purchase Plan (HPP) range. We’ve introduced the lowest HPP rental rate in our history – reduced to 2.69% on our 60% finance to value (FTV) Fixed HPP. If a customer who requires home finance of £200,000 over 20 years chooses this product, they can expect to save £720 a year on payments while in the fixed rate period.

HPPs are an ethical, Sharia-compliant alternative to conventional mortgages, which do not involve interest. They work on the Islamic finance principles of Musharaka (partnership) and Ijara (leasing). We purchase the property together with our customers, as partners. Over time the customer buys our share in the property, paying us rent on the portion that they do not yet own. When all acquisition payments have been made, full ownership transfers from the Bank to our customer.

Al Rayan Bank does not charge arbitrary administration fees to our HPP customers; instead our administration fees reflect the costs we incur. This means that they are often substantially lower than many of the fees charged by conventional banks. The administration fee for the 60%, 70% and 80% FTV HPPs is £399 and for the 90% FTV HPP it is £999, due to additional costs involved with the Government’s HPP guarantee scheme.

As with all of Al Rayan Bank’s home finance products there are no penalties for early settlement, even within a fixed rental rate period.
For more information about Al Rayan Bank’s HPP range, or to find out if a HPP might be right for you, please visit click here or call 0800 408 6407 to speak to a member of our customer service team.

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