The reductions, which will carry through until 30 June 2020, include:
- The 60% finance to value (FTV) product reduced to 2.89%
- The 70% FTV reduced to 2.99%
- The 80% FTV reduced to 3.19%
Furthermore, Al Rayan Bank has a fees assisted HPP range, which helps customers to move an existing home finance product to one of Al Rayan Bank’s HPPs by contributing towards some of the upfront fees normally associated with refinancing between different providers.
The discounted variable rental rates across the fees assisted HPP range have also been reduced by 0.25%, and include:
- Fees assisted 60% FTV reduced to 3.04%
- Fees assisted 70% FTV reduced to 3.14%
- Fees assisted 80% FTV reduced to 3.34%
There is no administration fee for the fees assisted HPPs range, while the standard HPP range carries a £399 fee.
HPPs are Sharia compliant mortgage alternatives which do not feature interest.
Unlike a typical mortgage where money is borrowed from a lender and repaid with interest, Al Rayan bank’s HPPs are based upon Islamic finance principles of co-ownership (musharaka) and leasing (ijara).
Customers buy their home in conjunction with the bank, with each taking a share – and instead of interest, customers make monthly payments consisting of two elements, an acquisition payment to increase their stake in the property and a rental payment for the use of the share of the home owned by the bank.
Eventually, when all payments have been made, ownership is transferred to the customer.