The home finance product is the first in the UK to be backed by the Government’s new Help to Buy: HPP guarantee scheme.
Commenting on the launch, Sultan Choudhury, Chief Executive Officer, IBB said:
“Having worked directly with the government to adapt its Help to Buy mortgage guarantee scheme to include HPPs, IBB is delighted to be the first provider to take advantage of the initiative. We know from experience that some customers, especially first time buyers, struggle to raise a deposit greater than 10% of the property value but can afford the necessary monthly payments. IBB’s new product has been designed to meet their needs and we are very pleased to be putting the reality of home ownership within the reach of many more individuals.”
Offering a rental rate of 4.99%, fixed until 31 December 2017, IBB’s new Sharia compliant HPP provides finance up to 90% of funds to value, meaning that customers can secure home finance with an initial contribution of just 10% of the value of the property. This is half the amount previously required by the Bank.
The HPP is expected to appeal to customers of all faiths as it offers flexibility and a more transparent fee structure compared to many conventional mortgages; IBB does not charge any penalties for terminating the HPP agreement early, and there are no hidden fees. The £999 administration fee of the new 90% FTV HPP represents the Bank’s standard fee of £399, which is proportional to the work undertaken by IBB to process the arrangement, plus a fair contribution towards the amount that the Government charges IBB to be part of its Sharia compliant Help to Buy scheme.
IBB’s new HPP marks an important milestone for Islamic finance in the UK as it puts ethical and affordable home finance within reach of many more people looking to get on, or move up, the housing ladder. Under the rules of the Scheme, it is not available to those wishing to purchase a second property.
