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Money Mortgages Buy to Let Mortgages Buy to Let Sharia Mortgages 
- Market competitive - available to all customers regardless of faith
- You must be aged 25 years or over, and under 65
- Resident of the UK or have indefinite leave to remain in the UK
- In full time employment or self-employed with a minimum of 2 years accounts
- An existing property owner and have been for 12 months or more
- Earning a minimum of £25,000
- Never been declared bankrupt or had a CCJ
- Not currently own more than 5 properties including their residential property
- The property must be in England or Wales and valued at £100,000 or over
- The property must earn a rental income equivalent to 125% or more of the monthly BTLPP finance payment
How the IBB Buy to Let Mortgage Plan works
The table below outlines the key differences between a Sharia compliant plan and a intertest based mortgage:
|
Sharia’a Compliant Plan |
Interest Mortgage |
|
The customer is renting the property from the Bank and will pay rent on the occupied share of the property |
The customer is paying interest on money borrowed as a loan received from the bank |
|
Both the bank and the customer are responsible for maintaining the property |
The customer is fully responsible for maintaining the property |
|
The bank charges an income in the form of rent for using its share of the property |
The bank charges an income in the for of interest on the loan borrowed by the customer |
|
The partnership between the customer and the bank puts equal risk for both parties associated with ownership of the property |
The bank carries no ownership risks |
|
The bank will legally own the property but the customer will have the beneficial interest of the property and the leasehold |
The customer is the legal owner of the property |
Below is an example of how the plan works:
Lets say you want a property that costs £150,000. You have £30,000 (20%) to pay towards the property. You want to spread the remaining cost over a 25 year period.
In this example, the Bank will pay £120,000 (80%) and you will pay your £30,000 (20%). All payments will be managed via the solicitors.
Based on this example, your monthly payment would be as follows:
|
Date |
Acquisition Payment |
Rent |
Total Monthly Payment |
|
Jul |
£333.33 |
£615.85 |
£949.18 |
|
Aug |
£335.26 |
£613.92 |
£949.18 |
|
Sept |
£337.19 |
£611.99 |
£949.18 |
|
Oct |
£339.12 |
£610.06 |
£949.18 |
|
Nov |
£341.05 |
£608.13 |
£949.18 |
|
Dec |
£342.98 |
£606.20 |
£949.18 |
These payments are split into two components:
Rent – This is the amount paid to the bank for it's share of the property. This is covered the ljara (lease) agreement.
Acquisition – This is the amount paid towards buying out the banks share in the property. This is covered by the Diminishing Musharaka (partnership) agreement.
As the banks share is reduced through payments, the rent reduces to reflect this.
The rent costs are fixed for the initial period of the Lease Agreement until either the end of March, or the end of September, whichever comes first after the date of completion. After this, the rent costs will be fixed for six month blocks and will be reviewed in March and September each year. At each Rent Review date the rent rate may increase, decrease or stay the same.
All rent payments are due in arrears and IBB will write to advise of any new payments in good time. The lease agreement sets out how the rent is calculated, how the rent may vary and also explains that you have the option to purchase the banks share (i.e. pay the remaining acquisition cost) at any time, subject to terms and conditions.
