Gatehouse

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    Gatehouse

    Anyone got experience with shariah compliant banks such as gatehouse?
    it appears they require a 20% deposit with rates from 3.75% and no early repayment charge .
    Not sure if they have a rental requirement.
    Anyone know more?

    #2
    Yes Shariah lenders operate a prudent rental stress calculation and take dull account of an applicant’s primary income and the need for a property to have a validated rental. The principle of Shariah flaw is that profit is not a feature under the Koran and therefore such transactions are jointly owned. For clarity I am detailing the broad criteria under which such loans are assessed and their eligibility.
    These are competitive facilities which I believe will grow in popularity
    A Buy-to-Let purchase plan offers you a Shariah-compliant alternative to a mainstream Buy-to-Let mortgage, with competitive rates and an ethical approach. You can use it just like a conventional mortgage to buy or refinance your property.

    With a Buy-to-Let purchase plan you buy the property jointly with us - your deposit is your stake, and we fund the rest. Once all your payments are made, you’ve bought us out, and the deed of the property transfers to you. You can sell any time, and there are no early payment charges.
    Am I eligible?

    Wherever you live, you can apply for Buy-to-Let finance if you meet these criteria:
    • Buying property in England or Wales
    • Seeking finance of at least £40,000 (UK residents) / £75,000 (Expat/International residents)
    • Minimum age 21 years
    • Earning at least £18,000, or £20,000 for portfolios & £25,000 for HMOs/MUFBs (UK residents) / £25,000 (Expat/International residents)
    • Available to first time landlords

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      #3
      It seems to me that the only way this could really be done on a proper shared risk basis is if it is done like shared ownership, in which case any capital payments would have to be as a proportion of the current market prices. Otherwise it would seem to be an interest based loan in disguise.

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        #4
        What the bank's website says :

        As a Shariah-compliant Bank, Gatehouse does not charge interest, instead the Bank and customer are joint owners of the property and the customer pays rent on the share of the property that the Bank owns.

        Gatehouse’s HPP products offer customers two options; Acquisition & Rent (the equivalent of a conventional capital & interest mortgage) and Rent Only (the equivalent of a conventional interest only mortgage).

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          #5
          How should this rent charge be accounted for against tax? Is the income split between the joint parties? Does this avoid the interest tax credit and benefit high rate tax payers?

          All clearly a play on words, its interest by another name! If loks like a chicken....

          Comment


            #6
            The shariah compliant mortgage is intended for muslim borrowers who are not allowed by their religion to pay interest.

            Presumably in olden days a failure to pay the excessive daily interest charge meant the entire family was forfeited into slavery.

            But current tax rules should allow the rent paid to co-owner ( mortgage bank ) to be treated as a business expense against BTL rental income.

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              #7
              I believe a lot of modern day human trafficking is associated with impossible debt burdens.

              Comment

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