Islamic Finance Guru

Gatehouse Bank Review – Islamic Mortgage: a deep dive

Gatehouse Bank’s Home Purchase Plan (HPP) is the cheapest option available in the home purchase space for a number of the HPP products. The structure is identical in legal form to the Al Rayan HPP. The Gatehouse HPP uses a combination of freehold and leasehold to deliver a diminishing musharakah/ijarah model. Gatehouse buys the freehold title in the house at the closing of the transaction, and it is its name that appears on the title. But the buyer gets an equitable interest in the freehold by way of the contract (Diminishing Musharaka Agreement) and also gets a leasehold alongside Gatehouse. Time passes, the Buyer continues paying rent and buying further equity in the house until eventually he owns 100%.

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