Explore our approach to ethical home financing
Get ahead with Primary Finance.
Fully Sharia compliant
Our product is fully Sharia compliant and has been certified by Sheikh Badrul Hasan of Dome Advisory services. We believe in being ethical and acting with integrity in everything we do, with the ultimate goal of doing business to benefit everybody mutually.
No burden of debt
Since the homebuyer is under no obligation to purchase equity in any given month the burden of debt is completely eliminated. This also means no early or late repayment fees ever.
Rental pegged to local housing market
The rent we charge has no relation to macroeconomic indicators such as interest rates. Instead it is determined by the local housing market and capped, with annual reviews to reduce uncertainty.
Affordability
The customer buys further equity at the original purchase price, not current market value (unlike the government’s help to buy scheme). We will usually compare against our competitors when quoting to ensure we charge the most competitive rate possible.
True risk sharing
In case of a shortfall upon sale, proceeds are split according to respective equity shares (traditionally, bank has first call on proceeds and homebuyer may end up with nothing upon foreclosure). If there is a profit we usually give all or most of it, including our share, to the homeowner.
Ultimate flexibility and security
Our product eliminates almost completely the risk of foreclosure by introducing an equity buffer. This allows the homebuyer to pay us equity if they cannot afford rent. They can then purchase it back again once they are able to, in their own time.
Rent or Interest: What's the difference?
Consider the following two examples.
Example 1
- Ari lends £5,000 to Lina.
- Lina must repay Ari within 1 year – so Lina owes Ari a debt.
- Ari charges Lina interest for each day that any or all of the debt is outstanding.
- This is interest as it is a monetary charge upon a debt.
Example 2
- Sara and Hamida purchase a car together for £5,000 each.
- Both are equal owners in the car, so nobody owes a debt to anybody.
- Hamida does not use the car so she charges Sara rent each month for the right to use it exclusively.
- This is not interest as there is no burden of debt (Sara does not owe Hamida the £5,000; she is simply paying to use the car).
- If Sara was contractually obliged to purchase Hamida’s share then it would be considered a debt and the "rent" would be equivalent to interest.
What does it cost?
We give the homebuyer complete control over their finances
The cost of the financing is dependent upon how the homebuyer treats the product. For example:
We recommend setting up a standing order to pay the recommended amount each month
Got questions?
What is the difference between this and an Islamic mortgage?
The key difference is that the Primary Finance Home Purchase Plan is free from the burden of debt as we do not force you to buy our share from us, although you are free to buy it from us if you wish.
Who owns the property?
You are the legal owner of the property from the start of the contract. We simply take a legal charge over it to protect our interest in the property. For pricing purposes we treat the property as though we are joint owners and calculate our share of the property based on the amount of money we have contributed.
How often is rent reviewed?
We conduct annual rental reviews. If local property prices in your vicinity have increased your rent will increase; if they have decreased your rent will decrease. The maximum increase or decrease is capped according to the terms in your offer letter.
When calculating your affordability and providing you with an illustration we will make the assumption that rent increases by the maximum amount each year. In this way you can be confident that, as long as you stick to the recommended monthly payment, you will never pay more than the illustration although you may pay less.