The concept of interest is against the principles of sharia so the product will allow customers to buy a property then pay rent on the bank’s share of the house in accordance with Islamic finance principals of co-ownership and leasing.
Borrowers would gain full ownership of the property once all rental payments were complete. For borrowers with a 35 per cent deposit the bank can offer a variable rate of 3.59 per cent and a higher fixed rate of 3.79 per cent until 30 June 2015.
Rental payments are then pegged to the IBB’s home finance rental rate which is currently 4.49 per cent.
|- Available to borrowers of all faiths|
|- The IBB home finance rental rate is based on the base rate plus|
|- Product fee of £399|
|- No early settlement penalty charge|
|- Intermediaries receive a 0.35 per cent fee on every successful application|
|Ruth Whitehead, director of London-based Whitehead Securities, said: “These mortgages are applicable for those who aren’t Muslim and want a product that has been put together ethically as there are very few options in this area. You have to look at the interest rates and ask if you’re happy to pay more for that ethical option, but they should be considered by those who have rightly turned against the banks.”|