Property financing for Muslim Landlords
At the last count there were over 2.5 million landlords in the UK. If you’re considering joining that number, no doubt you will have done your research into topics such as yields, deposits and insurance – but what about supporting Sharia compliant finance?
Al Rayan Bank offers the UK's widest range of Sharia compliant home finance products, including property finance for landlords. Al Rayan Bank continues to innovative and have just launched a new more tax efficient Limited Company Buy To Let Purchase Plan to its range.
How does a Buy To Let Purchase Plan work?
The principle difference between Sharia compliant property finance and a conventional mortgage is that no interest is involved at any stage in the home finance process.
Here’s how it works:
Al Rayan Bank buys the property together with you, as partners. You then make a payment to the bank every month, made up of two parts:
1. Rental payment – this is the amount that you would pay as rent on the bank’s share of the property.
2. Acquisition payment – this payment increases your share in the property. As your share in the property increases, your rental payment would decrease.
The exception is a rent only Buy To Let Purchase Plan, where the payments would only cover rent, and would not increase your share in the property. In this case, you’d need to make a lump sum payment to the bank at the end of the finance term to acquire the bank’s share.
What is a Limited Company Buy To Let Purchase Plan?
This is Al Rayan Bank’s latest Buy To Let Purchase Plan product, specifically for landlords that wish to invest in property as a Limited Company. If you’re interested, you can find out more here.
How much deposit would you need?
This depends on the product you choose. For a rent and acquisition Buy To Let Purchase Plan, you will need at least a 25% deposit. For a rent only Buy To Let Purchase Plan, you’ll need at least a 35% deposit.
What could your payments be?
Buying or refinancing a property to let is a major decision. To help you make the right choice, and to give you an indication as to how much your payments could be, check out our calculator here.
Is there a penalty for clearing the finance amount early?
No. All of the Al Rayan Bank’s Buy To Let Purchase Plans are very flexible; you can buy the Bank’s share, in part or full, or sell the property at any time without incurring any penalty charge subject to clearing the outstanding finance amount in full.
YOUR PROPERTY MAY BE AT RISK IF YOU DO NOT KEEP UP THE PAYMENTS ON YOUR BUY TO LET PURCHASE PLAN