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About Al Rayan Bank

Al Rayan Bank is the largest and oldest Sharia compliant retail bank in the UK, offering Islamic banking in Britain since 2004. The bank is wholly aligned with the ethical values of Islam, helping families and businesses alike. 

The only Islamic bank in the UK to receive a public rating, Al Rayan Bank has an Aa3 Moody's rating.  

At Teito, our team of experts work with hundreds of lenders, including Al Rayan Bank, to find the perfect finance for you. Whatever your situation, we make sure you get the best deal possible. Get started comparing Al Rayan finance options online now.

What kind of mortgages do they offer?

As a leading Sharia-compliant bank, Al Rayan does not offer traditional mortgages, and instead provides Home Purchase Plans specially tailored to the needs of devout Muslims.

These mortgage alternatives are permitted under the rules of Islam because they are not interest-bearing loans. Al Rayan offers home purchase plans for buying:

The bank’s Home Purchase Plans are based on the Islamic finance principles of co-ownership and leasing. The borrower must pay a deposit and Al Rayan will buy the property on their behalf, while agreeing to sell them their stake in it over time.

Over the term of the agreement, the borrower will pay monthly rent to lease the lender’s share of the property, with these payments continuing until full ownership is achieved.

Home Purchase Plan criteria

The eligibility criteria buying a residential property with one of Al Rayan’s Islamic mortgage alternative agreements is summarised below:

  • Property type: Purchase Plans can be used for freehold properties or leasehold properties with an unexpired term of at least 50 years plus the term of financing.
  • Credit history: Most Islamic mortgage alternatives require clean credit. Al Rayan will perform a credit check prior to the valuation stage of the application process.
  • Buildings insurance: The property must be covered by an ‘all risks’ buildings insurance policy for an amount specified in the valuation report.
  • Deposit requirements: Low deposit Home Purchase Plans are available for clients with 5-10% of the property’s value to pay upfront as a downpayment.

What rates to expect

You will not pay an interest rate on an Al Rayan Home Purchase Plan and will instead pay a “competitive” monthly rental rate to ensure the agreement is Sharia compliant.

Products with fixed rental rates for two and five years are available, and the rate is usually lower for clients who fix in for longer. You can also secure a lower rental rate by making a larger down payment as deals with higher finance-to-value ratios typically have higher rates.

Rental rates can vary from one Islamic mortgage lender to the next. Our brokers have access to a range of Sharia compliant banks, can compare the deals available on your behalf, and will match you with the right one for your needs and circumstances.

Get matched with an Islamic mortgage lender today

Commercial property finance

In addition to Home Purchase Plans, Al Rayan also offers commercial and buy-to-let mortgage alternatives for devout Muslims who wish to invest in property.

The main features if its Commercial Property Finance products are as follows:

  • Primarily for investing in residential properties to let out
  • Maximums loans of £2,500,000-32,000,000
  • Terms typically last 5 years but longer agreements considered
  • 1% arrangement fee is payable
  • Finance can be redeemed at the quarter end without penalty

Al Rayan is one of several Sharia-friendly lenders offering commercial property finance - get in touch and one of our brokers will give you a rundown of the alternatives.

Are Al Rayan Bank a good mortgage lender?

Al Rayan Bank has an above-average rating of 3.5/5 on review aggregator service Trustpilot, based on feedback from over 1,000 customers. They also have the same score from consumers on Smart Money People, based on a smaller customer sample of 57.

Speak to a broker about your Islamic mortgage options

Our mortgage brokers have access to a range of different Islamic mortgage lenders, including Al Rayan Bank. They can compare the rates and product ranges on offer at each of them and match you with the right one for your needs and circumstances.

Fill out our quick form to get started with one of our mortgage advisors today.

FAQs

They will provide up to 90-95% of the property’s value for residential Home Purchase Plans, and have maximum loan caps of £2,500,000-32,000,000 for commercial home finance.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.