Almost half of homebuyers would consider using an ethical finance provider – Gatehouse Bank

Nearly half (45%) of homebuyers would consider using an ethical home finance provider that aligns with Islamic principles, research from Gatehouse Bank has revealed.

The research showed that homebuyers were looking to make financial decisions that reflect their ethical commitments, with 69% of respondents noting the importance of green and sustainable options.

In line with this, more than a third (37%) said that they were most attracted to Shariah-compliant home finance providers because they do not invest in industries such as tobacco, gambling, alcohol, adult entertainment, and the arms industry.

This research coincided with several changes to Gatehouse Bank’s Home Purchase Plans, including rate reductions of between 0.65% to 1.00% across its range of products, which are available to UK residents, UK expats and international residents.

The bank also introduced a new 95% finance-to-value (FTV) product, which is open to all qualifying applicants, including first-time buyers and home movers.

The product was launched in line with the research’s findings that four in 10 (40%) of homebuyers set aside a deposit of 5% to 10% when purchasing a home.

The 95% FTV product carries a maximum finance limit of £500,000, while for 90% FTV products, the maximum finance limit has increased to £600,000.

For other products, the maximum finance limit has increased from £1m to £5m, with specific thresholds of 80% FTV for up to £2m, 75% FTV for up to £3m and 70% FTV for up to £5m.

A rate reduction of 0.65% has been applied to the Bank’s buy-to-let products, which include Houses in Multiple Occupation (HMO) and Multi-Unit Freehold Blocks (MUFB).

Gemma Donnelly, head of direct home finance at Gatehouse Bank, said: “Today’s rate reductions and the launch of our 95% FTV product have been designed with the research in mind, which revealed that four in 10 (40%) UK homebuyers allocate a deposit of between 5% to 10% when purchasing a home.

“We aim to make our ethical, Shariah-compliant products accessible to all, and hope our customers will make the most of our offering.

“Our green home finance products offer a reduced rental rate for customers purchasing a home with an energy efficiency rating of A or B, with Gatehouse Bank offsetting the carbon emissions generated by the average UK property for as long as the customer remains with the Bank with a qualifying property.

“This was an important provision for nearly half (48%) of respondents, who said they would opt for a provider who offered incentives for buying a property with a higher EPC rating.”

Lottie Dougill, head of intermediary sales at Gatehouse Bank, added: “It’s fantastic to see growing awareness of Shariah-compliant finance amongst consumers, particularly in younger generations, with nearly half (47%) of 18 to 24-year-olds keen to align their financial goals to their ethical beliefs.

“However, there is still work to be done by finance providers and brokers alike. It is important to continue addressing any lingering misconceptions around Shariah-compliant finance and thus closing any potential knowledge gap so that homebuyers are aware of all their options and can take advantage of the benefits that Islamic finance has to offer.”