IBB cuts rates on Sharia HPPs
The Bank’s HPP rates will now start at 3.99% for a variable rental rate and 4.19% for its fixed rate. The plans are available for up to 80% loan to value.
Imran Pasha, head of sales and service at the Islamic Bank of Britain, said: “Our Home Purchase Plans are available with a deposit of only 20%, with rates as low as 3.99%, a product fee of only £399 and flexible terms.
“This bucks the market trend in many ways. Some banks use low headline rates to attract the customer but these are coupled with high product fees which cancel out any savings the low rate offers.
“We don’t take this approach and are simply committed to offering fair rates and terms which deliver good value over the long term.”
As a Sharia compliant product IBB’s HPP differs from a mortgage where the customer borrows money from a lender which is then repaid with interest.
A HPP uses the Islamic finance principles of co-ownership (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.