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Five-year fixed rate Islamic mortgage alternative launched by Gatehouse Bank

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22/05/2019
The provider's new Home Purchase Plan (HPP) is available to UK residents, UK expats and international residents
Five-year fixed rate Islamic mortgage alternative launched by Gatehouse Bank

Gatehouse Bank has launched its first five-year fixed Home Purchase Plan (HPP) product – the longest fixed rate Shariah-compliant mortgage equivalent it has ever offered.

And the provider has announced rate cuts across its other fixed term plans.

The new five-year fixed HPP attracts an initial rental rate as low as 2.99%, and comes with a maximum Finance-to-Value (FTV) — the equivalent of Loan-to-Value (LTV) — of 80% for UK residents and UK Expats, and 75% for International residents.

The Home Purchase Plans attract no early payment charges, a feature that is increasingly attractive the longer a fixed rate applies.

How do the plans work?

As a Shariah-compliant bank, Gatehouse does not charge interest, instead the bank and customer are joint owners of the property and the customer pays rent on the share of the property that the bank owns.

Gatehouse’s HPP products offer customers two options; Acquisition & Rent (the equivalent of a conventional capital & interest mortgage) and Rent Only (the equivalent of a conventional interest only mortgage).

Lower rates

Gatehouse has also improved the rates available on all of its existing HPP products by up to 0.7%. The Bank’s two-year fixed HPP for UK residents is reducing from 3.19% to 2.79% at 50% FTV.

For both UK Expats and International residents, it is also introducing a new 50% FTV band for HPP, which it expects to prove attractive to those seeking to refinance. For UK Expats, this means rates now start at 2.99% for the two-year fixed and 3.39% for the five-year Fixed. For International residents, the two-year fixed starts at 3.49% and the five-year fixed at 3.79%.

Charles Haresnape, CEO of Gatehouse Bank, said: “We’re seeing strong appetite in our Home Purchase Plan (HPP) and Buy-to-Let (BTL) products. Testament to that is the way we have had to rapidly widen the scope of what we’re offering over the past six months.

“Since launching HPP and BTL, the early signs are showing a demand for Shariah-compliant products from people who value good service and the way we’re committed to making decisions based on each customers’ circumstances.

“With an approvals process underpinned by a human approach, not machines, it’s never the computer that says no and we’re not turning people away for no reason, even if other providers already have.”

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