Ethical finance is gaining traction among UK homebuyers, with almost half (45%) considering using a provider that follows Islamic principles, according to a recent study by Gatehouse Bank.
Gatehouse Bank, a Shariah-compliant UK challenger bank, found that UK buyers are increasingly seeking financial decisions that align with their ethical commitments. An impressive 69% of respondents highlighted the importance of green and sustainable options when purchasing their home.
Interestingly, 37% of UK buyers are drawn to Shariah-compliant finance providers because they steer clear of investing in industries considered unethical, such as tobacco, gambling, alcohol, adult entertainment, and the arms industry.
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These findings coincide with changes to the Bank’s Home Purchase Plans, including rate reductions available to UK residents, UK expats, and international residents. The bank has introduced a new 95% FTV product in response to the study's findings that 40% of buyers set aside a deposit of 5 to 10% when purchasing a home.
The Bank’s 95% FTV product carries a maximum finance limit of £500,000. For 90% FTV products, the limit has increased to £600,000, and for other products, the maximum finance limit has soared from £1 million to £5 million.
In addition, a rate reduction of 0.65% has been applied to the Bank’s Buy-to-Let products, which include HMO and MUFB.
Gemma Donnelly, Head of Direct Home Finance at Gatehouse Bank, says, “We aim to make our ethical, Shariah-compliant products accessible to all, and hope our customers will make the most of our offering."
The bank also offers green home finance products with a reduced rental rate for customers purchasing a home with an energy efficiency rating of A or B. This provision was important for 48% of respondents, who said they would opt for a provider who offered incentives for buying a property with a higher EPC rating.
Clearly, the trend towards ethical and sustainable finance is growing. As consumers become more conscious of their impact on the world, it's likely we'll see even more demand for ethical finance options in the future.
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