Gatehouse Bank has launched its first product for homebuyers after securing regulatory approval.
The Shariah-compliant bank’s first Home Purchase Plan (HPP) product, an alternative to a conventional mortgage, will initially be available directly from the bank and through One Option Finance, a broker.
Following an initial pilot period, Gatehouse will roll out a wider range of products early in 2019 and plans to make its full offering available to all its intermediary partners.
As a Shariah-compliant bank, Gatehouse does not charge interest; instead the bank and customer are joint owners of the property and the homebuyer pays rent on the share of the property that the bank owns.
Gatehouse’s HPP product offers customers two options: Acquisition & Rent (the equivalent of a conventional capital and interest mortgage) and Rent Only (the equivalent of a conventional interest-only mortgage).
The initial product, a two-year fixed term HPP, will appeal to those looking to refinance and homebuyers with a significant deposit.
It offers UK homebuyers:
- Two-year fixed term with an initial rental rate of 3.19%, reverting to the bank’s Standard Variable Rate, which is currently 5.50%, after the fixed term
- Maximum Finance to Value of 50% of the property’s value
- No Early Settlement Charge, even during the fixed term
- Finance term 5-35 years
Gatehouse Bank’s first Home Purchase Plan product will also be available to expats at a 3.75% initial rental rate and international customers at a 3.99% initial rental rate.
Charles Haresnape (pictured), CEO of Gatehouse Bank, said: “Launching our first Home Purchase Plan product is a milestone for the bank, as this further increases the range of financial services that we are able to offer individuals. We aim to bring additional competition to the home finance market and, due to our Shariah principles, we will not be charging early settlement charges on our Home Purchase Plans, which we believe will prove to be a popular feature with many homebuyers.
“Gatehouse plans to offer competitive products together with human underwriting that will appeal to all homebuyers, Muslims and non-Muslims alike.
“I’m confident that our pilot will be successful and we are planning to launch a fuller range of products early next year.”