The UK’s largest and oldest Islamic retail bank has also announced that it has simplified its buy to let finance range by removing its 65% finance to value (FTV) band and making the new attractive rental rates available to all customers requiring up to 75% FTV (25% deposit) on its rent and acquisition product.
The products which are believed to provide the UK’s lowest Sharia compliant buy to let finance rental rates^ are available to landlords either directly – via the Bank’s national branch and office network, its UK based customer service centre, or its website – or indirectly through intermediaries. The rental rates are as follows:
• Discounted variable: 75% FTV, rental rate of 3.14% until 30 June 2020
• Fixed: 75% FTV, rental rate of 3.24% until 30 June 2020
Other product features include:
• No early settlement penalty for clearing the finance in full early, even during a fixed rental rate period (an administration fee will apply)
• A product fee of 1% (a minimum fee of £995 applies)
• Rent only option available up to 65% finance to value
Unlike conventional buy to let mortgages, where a landlord borrows money from a lender and repays it with interest, Al Rayan Bank, as a Sharia compliant bank, uses the Islamic finance principles of co-ownership (musharaka) and leasing (ijara) on its property finance products. BTLPP customers acquire the property jointly with the Bank, their monthly payments increase their share in the property, whilst at the same time they pay a rental charge to the Bank for use of the portion of the property that they do not yet own. At the end of the finance term, when the finance has been settled, ownership transfers to the landlord.
