Al Rayan Bank enhances its Home Purchase Plan range
Just one year after it launched the UK’s only Home Purchase Plan (HPP) to be backed by the Government’s Help to Buy guarantee scheme, Al Rayan Bank today announced that it has further enhanced its HPP range by introducing two new products, reducing the rental rates for customers with larger deposits, and extending the length of time that customers can benefit from fixed or discounted variable monthly payments.
Designed to offer more choice to customers, Al Rayan Bank’s enhanced HPP range enables home finance to be secured with a range of deposits:
- New 60% finance to value (FTV): requires a 40% deposit, with a fixed rental rate of 3.49%* and a discounted variable rental rate of 3.29%*
- New 70% FTV: 30% deposit, with a fixed rental rate of 3.79%* and a discounted variable rental rate of 3.59%*
- 80% FTV: 20% deposit, with a fixed rental rate of 4.19%* and a discounted variable rental rate of 3.99%*
- 90% FTV requires a 10% deposit, with a fixed rental rate of 4.99%*
Rental rates apply until 31 December 2017 for the 60%, 70% and 80% FTV HPPs and until 31 December 2018 for the 90% FTV HPP. All rental rates will revert to the Al Rayan Bank Variable Rental Rate, which for Home Purchase Plan is Bank of England Base Rate (BBR) +3.99%
The Bank has removed its 65% FTV HPP product from its range, but the new 70% FTV HPP has the same rental rate, meaning that customers can secure the same HPP rental rate as before but with 5% less deposit.
Al Rayan Bank’s Home Purchase Plans (HPPs) are open to all customers, regardless of faith, and provide ethical home finance that is fully Sharia compliant. Unlike conventional mortgages where money is borrowed from a lender and repaid with interest, HPPs are based upon the Islamic finance principles of a Co-Ownership Agreement (Diminishing Musharaka) with Leasing (Ijara). Customers buy the property together with the Bank and pay rent on the Bank’s share. Over time the customer’s share in the property increases and at the end of the finance term, customers own the property outright.
As an Islamic bank, Al Rayan Bank does not charge arbitrary administration fees to its HPP customers; instead administration fees simply reflect the effort of its employees and the costs incurred by the Bank. This means that they are lower than many of the administration 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. As with all of Al Rayan Bank’s home finance products there are no penalties for early settlement, even within a fixed rate period.
As an independent UK bank, Al Rayan Bank is authorised by the Prudential Regulation Authority, regulated by the Financial Conduct Authority and the Prudential Regulation Authority and is a member of Financial Services Compensation Scheme.
Intermediaries can find out more by accessing Al Rayan Bank’s dedicated intermediary support service, which can be contacted on 0800 694 7238. Upon registration, Intermediaries will be able to introduce business to Al Rayan Bank by referral, i.e. the provision of customer contact details.
* Subject to status. Terms and conditions apply.
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