The lender has also increased its finance to value band from 65% to 75%, making its new rates available to all customers with a 25% deposit.
Its new products include discounted variable rates from 3.14% and fixed rates from 3.24%, both with a 1% product fee.
Unlike conventional buy-to-let mortgages, where a landlord borrows money from a lender and repays it with interest, Al Rayan Bank, as a Sharia compliant bank, uses the Islamic finance principles of co-ownership (musharaka) and leasing (ijara) on its property finance products.
BTLPP customers acquire the property jointly with the Bank, their monthly payments increase their share in the property, whilst at the same time they pay a rental charge to the Bank for use of the portion of the property that they do not yet own. At the end of the finance term, when the finance has been settled, ownership transfers to the landlord.
Al Rayan also offer a rent only option up to 65% finance to value.
The Bank charges no early settlement penalty for clearing the finance in full early, even during a fixed rental rate period.
