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21st September 2022

New launch: 5% deposit Islamic finance for home purchase plans!

A lender has introduced Home Purchase Plan (HPP) products for First Time Buyers with a 5% deposit. It has been a great turnaround in the Islamic finance industry in the UK. The Covid-19 pandemic forced the Islamic finance providers to increase their minimum deposit requirement up to 20% loan to value. Today, it has come down to a 5% deposit allowing first-time buyers to apply for Islamic finance and get on the property ladder.

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Who can apply for the 5% deposit Islamic finance HPP?

The low deposit (5% of the property value) Home Purchase Plan (HPP) products are available to first-time buyers who are living in the UK. Further, they need to have permanent rights to reside in the UK. It means that if you are a British ex-pat living abroad, you would still require a higher deposit of 20%.

In addition, the lender has also launched HPP products up to 90% loan to value for UK resident purchasers, home movers, and customers refinancing their property.

What are the minimum property value and finance amount?

More good news! The Islamic finance provider has reduced the lower-level cap on minimum finance amount from £150,000 to £100,000. It means the minimum finance amount to be raised with the provider would be £100,000 and the minimum purchase price would be £105,000.

Before the latest criteria update, the GateHouse bank had a minimum property value cap at £190,000. Applicants who wanted to buy a property below £190,000, could proceed with the transaction. Now, they can start working on the home buying process if the purchase price is above £105,000 and they have a 5% deposit.

Foreign Nationals permanently residing in the UK:

The lender would require a valid UK Visa with at least 12 months unexpired at the point of application together with a valid Passport. Applicants must be residents in the UK for the last 6 months consecutively at the time of application. Applicants must have 12 months continuous employment history; of which the last 6 months must be in the UK at the time of application.

If you are a non-British national living in the UK without permanent rights to reside, the lender would require a minimum 25% deposit.

The lender would require,

- Twelve months validity on the passport.

- Home office letter confirming the UK Visa or Biometric Resident Permit Card or Visa Stamp on the passport are acceptable

- Applicants UK contract of employment

Key changes in the Islamic Finance criteria for home purchase plans

These products will be withdrawn without any prior notice

Contact Us

Applicants can speak to a specialist Islamic finance adviser to explore the options and check their eligibility to apply for a home purchase plan. We at WIS Mortgages, provide specialist Islamic finance advice for free!