Landlords with a deposit of 35% (65% finance to value) can now access finance from just 4.49%**, with an option to take a rent-only* BTLPP. The 0.4% cut is the latest in a series of rental rate reductions the Bank has applied to both its residential and buy to let finance products.
Landlords, of all faiths and ethical beliefs, can now access Sharia compliant and ethical rental property finance with deposits of 25% and 35% as follows:
1. 25% deposit (75% finance to value)
a) Discounted variable rental rate BTLPP at 4.89%** (discounted by 0.60%) until 30 June 2015
b) Payment consists of both acquisition and rent payments*
2. 35% deposit (65% finance to value)
c) Discounted variable rental rate BTLPP at 4.49%** (discounted by 1.00%) until 30 June 2015
d) Payment can either be rent-only or acquisition and rent*
Other product features include:
• The ability to make additional acquisition payments, subject to a minimum of £4,000 and a small administration fee
• No penalty for clearing the finance in full early
• An administration fee of 1% (a minimum fee of £995 applies)
• Minimum property finance of £30,000, maximum finance of £500,000 (£750,000 in Central London) and minimum property value of £90,000
Commenting on the new rental rates and products, Imran Pasha, Head of Sales and Service, Islamic Bank of Britain said, “IBB has reduced its rental rates again, specifically for landlords with a deposit of 35%, to 4.49%**. This deal comes with a rent-only payment option, which helps to lower the landlord’s monthly payments even further. IBB’s recent rental rate reduction has been made in response to demand from investors keen to access affordable, Sharia compliant buy to let products which allow them to maximise the potential of the active rental market.”
As a Sharia compliant product, IBB’s BTLPP differs from a mortgage where the customer borrows money from a lender which is then repaid with interest. A BTLPP uses the Islamic finance principles of co-ownership (Diminishing Musharaka) with leasing (Ijara), where IBB and the customer buy the property as partners and the customer pays rent on IBB's share in the property. At the end of the term, when all acquisition payments have been made and the finance has been settled, ownership of the property transfers fully to the customer. See the explanation entitled ‘How does a BTLPP work’ in the notes below for more details.
As an Islamic bank IBB does not use any interest-bearing products to finance customer’s homes. Instead it uses its own funds, or the savings deposits from its customers, all managed entirely in accordance with ethical and Sharia principles.