Commercial Property Finance – Typical example
You will make monthly payments towards buying the Bank’s share (this is called the Acquisition Payment) as well as an installment of Rent. The example below explains how the Acquisition Payments and Rent may be calculated:
- Assume a property purchase price of £300,000
- Assume you have £90,000 (i.e.30%) to pay towards the property purchase price (This will be the your share.)
- Assume a Rental Payment rate of 7.5% per annum.
- On this basis, the bank will pay the seller £210,000 (i.e. 70%)
- You will pay £90,000 (i.e.30%) towards the purchase price.
- These payments will be made via the solicitors.
- On completion you will agree to purchase the bank’s share under the Diminishing Musharaka agreement
- You will also agree to lease the bank's share of the property under the Ijara agreement.
- On a monthly basis, you will be paying an Acquisition Payment and a Rental payment.
Based on these circumstances, and calculating the payments over a 25 year term, the payment schedule for the first six months will be as shown in the table below.
| Date |
Rental
Payment |
Acquisition Payment |
Total Monthly Payment |
Bank's Equity in the Property |
| 1st July |
£1,312.50 |
£239.38 |
£1,551.88 |
£209,760.62 |
| 1st Aug |
£1,311.00 |
£240.88 |
£1,551.88 |
£209,519.74 |
| 1st Sept |
£1,309.50 |
£242.38 |
£1,551.88 |
£209,277.36 |
| 1st Oct |
£1,307.98 |
£243.90 |
£1,551.88 |
£209,033.46 |
| 1s Nov |
£1,306.46 |
£245.42 |
£1,551.88 |
£208,788.04 |
| 1st Dec |
£1,304.93 |
£246.95 |
£1,551.88 |
£208,541.09 |
Additional costs
As with all property purchases, there will always be some unavoidable costs and expenses. Here are some of the most significant costs that you would be responsible for paying:
Stamp Duty Land Tax
A tax payable on all UK property purchases (unless the property is exempt).
Valuation Reports and Survey
A property valuation will be necessary.
Solicitor’s fees
We believe that it is best practice for our customers to obtain their own legal advice. Custromers will be required to instruct a solicitor and act on their behalf. Customers will also be required to pay the Islamic Bank of Britain legal fees in addition to their own legal fees.
For further information about this product and to find out how we can help you, please call us on 0845 6060 786 or visit your local branch.