What is Sharia finance?
Sharia finance principles are derived from Islamic teachings and encourage ‘fair play’ that promotes fairer, more socially responsible ways of conducting financial affairs. Products and services that are Sharia-compliant are available to all and suitable for both Muslims and non-Muslims alike.
Sharia principles encourage trade and enterprise in order to create real prosperity for the benefit of the entire community. It achieves this in a method that is stable, transparent, and allows for an equitable distribution of risk and profit.
How is Sharia finance different to conventional finance?
The following are some important differences between Sharia and mainstream finance:
Finance and investments must not be used to support industries or activities that violate the principles of Sharia. Alcohol, tobacco, pork and non-halal meat production, gambling, adult entertainment, and arms production are among them.
Money must be put to good use in order to make profit from a legitimate commercial or economic activity. It is illegal to pay or receive interest (making money from money).
How does Nomo make sure its finance products are Sharia-compliant?
We have a Sharia Supervisory Board (SSB) who oversee all of the bank’s activities to ensure top to bottom Sharia compliance. The SSB is appointed by the Board of Directors but reports to the bank's shareholders directly.
What type of Islamic banking does Nomo use?
For financing products, Nomo uses Commodity Murabaha.
Commodity Murabaha involves Nomo facilitating a sale of metal commodities to you for the amount equal to the finance amount and bank profit-rate. This amount will be repaid on a deferred basis over the chosen finance period. You will take ownership of the metal commodity and consequently sell to a third-party. Nomo will take care of these procedures on your behalf.
Do I have to follow Islam in order to use Nomo's Sharia finance products?
No, Sharia-compliant products and services are available to everyone and are available for Muslims and non-Muslims alike.
What is Nomo Property Finance?
Nomo Property Finance is a digital, Sharia-compliant property finance product.
We currently offer:
Rental property finance for properties in England and Wales (UK), for buyers that want to rent out a property to long-term tenants
Residential property finance for properties in England and Wales (UK), for buyers that want to purchase property to live in, or use as a holiday home
We've based Nomo Property Finance on traditional property finance offerings, and streamlined the application process where possible to make the entire process simple and stress-free for our customers. Here’s how we do it:
We only ask relevant questions, and never ask for the same information twice.
We keep you informed at every stage of the process from application, approval and completion, to funding your account with the finance amount.
Our team is here to support you should you have any questions.
How is Nomo’s digital property finance offering different to a traditional lender?
At Nomo, we aim to deliver a property finance service that's fast, simple and transparent. We do as much as possible digitally, which helps us speed up and simplify everything we do.
Fast: as we only ask relevant questions without having to ask the same questions twice, the property finance journey is significantly reduced.
Simple: An easy-to-use app gives you property finance at your fingertips.
Transparent: Always know exactly how your application is progressing by checking in the Nomo app. You’ll be notified at every stage of the process.
What is rental property finance?
Rental property finance is a Sharia-compliant buy-to-let mortgage alternative.
This type of property finance is for people looking to buy a property to rent out to long-term tenants as an investment, rather than to live in.
Nomo Rental Property Finance is profit-only, which means that the monthly payments will only pay off the bank's profit, not the finance amount itself. This amount will need to be paid off in full at the end of the repayment period.
What is residential property finance?
Residential property finance is a Sharia-compliant residential mortgage alternative.
This type of property finance is for people looking to buy a property to live in, rather than to rent out to long-term tenants as an investment.
Nomo Residential Property Finance is repayment financing, which means that monthly payments will pay off the bank's profit, and a small part of the finance amount. Once you make all your payments, you will have paid off the whole finance amount at the end of the term.
What does FTV mean?
Finance-to-value, or FTV, is the percentage ratio of the finance amount against the value of the property.
For example, if you ask Nomo for a finance amount of 350,000 GBP to purchase a property for 500,000 GBP, the FTV will be 70% (350,000 / 500,000 x 100 = 70%. This means you will need to provide a down-payment of at least 30% of the property value. In conventional mortgage terms, this may be referred to as loan-to-value or LTV.
The maximum FTV for each product is stated on the product pages, which you can find here for rental and here for residential.
What does 'profit only' mean?
Nomo Rental Property Finance is profit-only, which means that the monthly payments will only pay off the bank’s profits, not the finance amount itself. The finance amount will need to be paid off in full at the end of the repayment period.
What is a follow-on rate?
The follow-on rate is the rate that your finance will switch to once your initial fixed-rate period ends and you do not select any of the Bank’s fixed rates at this time. All of our finance products automatically switch to a follow-on rate when your initial fixed-rate period ends. This will vary over the period of the finance amount and is set internally.
What happens at my end of my fixed-rate period?
After your fixed-rate period ends, you have various options available:
You can choose once more a product from our range of fixed-rates with a new fixed repayment period
If you do not choose another fixed rate, you will automatically move to our follow-on rate. This will vary over the period of the finance amount and is set internally
Alternatively, you could refinance to another provider
What is a down payment?
This is the amount you need to pay upfront yourself towards the purchase price of the property.
What is a personal credit report?
This is a report from your local credit bureau such as the Ci-Net in Kuwait, Experian Credit Score in the UK, or Al Etihad Credit Bureau in UAE.
The report contains information regarding your credit history and finance products you currently have.
What is the Nomo Rental Property Finance application process?
If you’re a new customer, you will first need to download the Nomo app and apply for a Nomo Bank account. You can do this from your smartphone.
Once you’ve been approved, or if you’re an existing customer, click on the Property Finance section of the website to begin the application process.
Then follow these steps…
If you’re just researching properties:
Get an Agreement in Principle in the Nomo app. This is a certificate showing an estimate of the amount you could receive in property finance and shows the property agent and seller you’re in a position to make a serious offer.
Use the certificate as an indication of the finance amount that Nomo could offer to help you in your research and shortlist properties you could purchase with the help of Nomo Property Finance.
If you’ve made an offer on a property that's been accepted:
Start a full rental property finance application in the Nomo app.
Add details about yourself, your property finance needs and the property you would like to finance.
Email us the necessary supporting documents.
Nomo will assess your application and make a decision.
When approved, you will receive your rental property finance offer from us. After you accept it, we will start the process of providing finance for you to complete the purchase of the property.
We’ll keep you updated at every stage of the process, and our app has plenty of helpful information to help you complete your application.
How long is the property finance approval process with Nomo?
At Nomo, we aim to make a decision on your application as fast as possible. Through our digital app, we look to deliver a service that is fast, simple and transparent.
Can I get rental property finance on a new-build property?
Yes. The minimum and maximum amount of finance can be found on the product pages, which you can find here.
I'm self-employed, can I still receive rental property finance?
What is the maximum finance-to-value (FTV) ratio on Nomo Property Finance?
Why does Nomo use '%' rates if they do not charge interest rates?
Our products use ‘%' rates to show the bank profit rates. This is the percentage of the finance amount that you pay to Nomo as a fee.
What are the minimum and maximum amounts of finance available?
Are early payment charges payable on Nomo Rental Property Finance?
Early payment occurs when you look to repay your property finance amount in full earlier than the minimum period length. There is no additional charge to repay early. However, you will need to pay the outstanding finance amount plus bank profit for any remaining fixed-rate or variable-rate payment period up to the early repayment date. An account settlement fee will also apply to early payment (£240) plus any legal fees.
For example, on a 5-year fixed rate at 6.61% (60 months), if you repay your finance on:
• Month 12, you will be liable to repay all profit for the remaining 48 months
• Month 24, you will be liable to repay all profit for the remaining 36 months
• Month 36, you will be liable to repay all profit for the remaining 24 months
• Month 48, you will be liable to repay all profit for the remaining 12 months
• Month 60, you will not be liable to repay any more profit
What is the Nomo Residential Property Finance application process?
You will need to go to an FCA-regulated mortgage broker in order to receive regulated advice, to ensure that you are obtaining the best property financing for your individual needs and circumstances.
Based on their advice, if the mortgage broker recommends Nomo to you, and you choose to proceed with property finance from Nomo, then the broker will support you through the steps.
If you’re a new customer, you will need to download the Nomo app and apply for an account, prior to starting the application. You can do this from your smartphone.
Alternatively, you can also start the journey on your own behalf by filling out a fact find about you and the property (e.g., income, expenses, property details), then booking an appointment with one of our FCA-regulated mortgage advisors to ensure that you are obtaining the best property financing for your individual needs and circumstances.
We’ll keep you and your broker (if there is one) updated throughout the process, and our app has plenty of helpful information to help you throughout.
How much will rental property finance cost me on a monthly basis?
The cost of the property finance will depend on the amount of finance you receive, as well as your product preference. You can find more information on our product pages here for rental and here for residential, or use our finance calculator to help you get an idea of the costs (currently only available for rental).
You can also get an Agreement in Principle in the Nomo app to get an indication of the amount of finance that Nomo could offer and understand the costs associated with the finance (currently only available for rental property finance).
Do I need to find a property before getting a rental property finance?
To start a full application for Nomo Property Finance, you must have had an offer accepted on a property.
While you’re searching for properties, or if you’ve found a property that you would like to make an offer on, you can get an Agreement in Principle (AIP) which shows you the finance amount that Nomo could offer (currently only available for rental property finance). You can generate an AIP certificate in minutes in the Nomo app.
Obtaining an Agreement in Principle (AIP) for residential properties in the Nomo app is coming soon.
Will Nomo carry out a property valuation and surveys?
As a part of the full application, Nomo is required to run a valuation on the property that you're seeking financing for. We will instruct a professional valuation company to produce a report to assess whether the property is adequate as security for the finance arrangement you are applying for. This helps us understand if we're able to offer finance for the property.
It’s important to know that Nomo’s survey may not reveal defects in the property, and it’s important that you don’t rely on it in any way when deciding whether to go ahead with the purchase. We recommend you arrange a more detailed report in order to decide if the property is suitable for you.
Will I pay Stamp Duty?
When you buy a property in the UK, you may be required to pay tax such as Stamp Duty Land Tax, Land Transaction Tax or income tax from your rental property.
For more information about the Stamp Duty Land Tax Stamp Duty Land Tax applicable to properties in England and Land Transaction Tax Land Transaction Tax | GOV.WALES for properties in Wales, please refer to the UK government website.
There may be other taxes due or resulting from the purchase of your rental property and you should review your personal tax situation and the implications of owning the property with a tax specialist.
What are income tax and capital gains tax?
Capital gains tax is a tax on the profit when you sell or dispose of something (such as a property) that has increased in value. It is the increase in the value of the property that will be taxed.
Income tax is a tax you pay on your income above the personal allowance (if you are eligible for the same). You do not have to pay tax on all types of income - for more information, please refer to: Income Tax: introduction.
You should review your personal tax situation and the implications of owning the property with a tax specialist.
I’m struggling with my property finance payments – what can I do?
If you’re struggling with your property finance payments, please contact us immediately so we can understand your circumstances and try to help you. This may involve changing your finance term or temporarily switching to partial repayments.
See MoneyHelper - Problems Paying Your Mortgage for more guidance on repaying your property finance, or MoneyHelper - Debt Advice Locator to talk to a free, independent debt advisor.
Why are there two sets of lawyers?
For us to complete the property finance transaction for you, Nomo will need to appoint its own lawyers to act for Nomo in agreeing the property finance documents. Nomo’s lawyers are separate to the lawyers who will act for you in this process. You will need to pay the fees for both sets of lawyers.
Why is a Nomo bank account needed for a property finance application?
To start your property finance journey you will need to open a Nomo bank account as it allows seamless payment of the finance, ensures you’re easily able to stay on top of your payments, and allows us to keep you informed of all relevant info all in one app.
Applying for a Nomo account is quick. Once we have your information we will only ask questions that are relevant, and never ask for the same information twice.
Can you provide advice and do you charge a fee?
We provide regulated advice for residential property finance that is free of charge. Alternatively, you may apply via a broker and receive the regulated advice from them (charges are dependent on your broker).