Landlords of all faiths 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) Fixed rental* rate BTLPP at 5.09%**, fixed until 31 December 2015
b) Payment consists of both acquisition and rent payments*
2. 35% deposit (65% finance to value)
c) Fixed rental* rate BTLPP at 4.69%**, fixed until 31 December 2015
d) Payment can either be rent-only or acquisition and rent*
Other product features include:
• No early settlement charge for clearing the finance in full early, even during a fixed rental rate period (a small administration fee will apply)
• 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 deals, Imran Pasha, Head of Sales and Service, Islamic Bank of Britain said, “IBB’s fixed rental rate BTLPPs are ideal for landlords looking to fix their outgoings over the next two years. The deals have been launched in response to growing demand for Sharia compliant finance as the Buy to Let market continues to enjoy a resurgence.”
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.