Comparisons

Islamic mortgages just got cheaper in the UK

We had a core prediction when we launched our Islamic mortgage comparison tool – we thought Islamic mortgages would get cheaper.

The easier it is to compare between banks and the easier it is to reach a mass audience, the more competition and new entrants there would be in the market and the cheaper the Islamic mortgages would get.

Well that prediction just came true.

Both Gatehouse and Al Rayan have dropped their rates across a range of their products.

Of course they still remain some way of the mainstream prices, but as we have explained here, that has its own reasons. But for now this is an extremely welcome change. Hopefully many more such announcements to come!

Highlights

  • In the Home Purchase Plan space, the 80% FTV (finance to value) product is a crucial product that many people go for.
    • Al Rayan is now in touching distance of Gatehouse’s market-leading rate of 3.19. Al Rayan’s cheapest rate here is the discounted variable deal that is now 3.29%. So if you’ve previously been rejected or do not meet the criteria of Gatehouse, could be a good option to explore.
  • Both banks have made cuts in the buy-to-let space, clearly targeting this area.
    • Gatehouse only offers fixed deals and was until now market-leading with a 3.19% rate on its 80% FTV 2-year deal. But now Al Rayan’s variable 2-year rate is also 3.19%/. So if you’re not bothered if your rate is fixed or variable, you have two equally good options now.
    • Al Rayan is now also offering a 5-year fixed deal at 3.89%, but Gatehouse’s 5-year fixed deal at 3.65% still remains the market-leading rate.

Here are the details

Al Rayan

Home Purchase Plan

  • Rates have dropped on the 80% FTV product. For the discounted variable deal it has gone from 3.44% to 3.29%. For the fixed deal it has gone from 3.69% to 3.39%
  • The 90% and 95% FTV product prices remain the same however.

Buy-to-let

  • Rates have dropped on the discounted variable 2-year deal from 3.74% to 3.19%
  • Rates of dropped on the fixed 2-year deal from 3.84% to 3.39%.
  • Al Rayan is now offering 5-year fixed rates as opposed to just 2 years which is priced at 3.89%.
  • For the full table, see below:
Rental rate Term FTV Admin fee
3.19% Discount until 30/06/22 80% 1.00% (Min £995)
3.39% Fixed until 30/06/22
3.89% Fixed until 30/06/25

Expats also see a price drop:

EXPAT Buy to Let

Type
Rental rate Term FTV Admin fee
BTL 3.84% Discount until 30/06/22 80% 1.00% (Min £995)
4.09% Fixed until 30/06/22
4.64% Fixed until 30/06/25
3.64% Discount until 30/06/22 75%
3.89% Fixed until 30/06/22
4.44% Fixed until 30/06/25

 

 Gatehouse

Home Purchase Plan

  • Rates have stayed the same on the 80% FTV and the 65% FTV. They are 3.19% and 3.49% respectively.

Buy-to-let

  • Rates of dropped on the fixed 2-year deal from 3.29% to 3.19%.
  • Gatehouse continues to offer its 5-year fixed rates deal which is priced at 3.65% – down from 3.89%.

We appreciate that is a lot of data to take in. But there’s a solution: you can easily compare between the various options on our Islamic mortgage comparison tool. You can then easily submit your details through there to Gatehouse, Al Rayan or Al-Ahli, who will be in touch with you directly. The more of you use our comparison engine, the stronger we can speak for Muslim consumers when we have conversations with these banks.

3 Comments

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3 Comments. Leave new

  • My joint income with my wife allows us to obtain a property valued at £500k+ (this is 4.5 times our income) but since our deposit is 5% or 10%, Al Rayan will not finance more than £400k. Is there anything I can do to get more finance from Al Rayan or elsewhere in a shariah compliant way? Most of properties we have found are in the £450k to £500k range, so ideally would need an additional £50k to £75k finance. We both have great jobs and have been renting for 9 years since marriage and really keen to stop renting and buy. Just seems like we are slightly short.

    Reply
    • I’d look for a cheaper house iA. Even in London there are cheaper houses. I myself and my family have bought houses under 400k in London. It might mean a compromise on quality and location – but that’s what is better than going for a haram mortgage.

      Reply
  • Hi do you have any articles on a guide and tips into entering the buy-to-let market using an islamic mortgage and if it’s profitable? Would be really appreciated!

    Reply

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