The scheme was launched today and will enable Sharia compliant banks, such as IBB, to offer UK Muslims affordable home finance.
IBB’s support to the Government for the scheme was headed by Samir Alamad, Head of Sharia Compliance & Product Development.
The Help to Buy: HPP guarantee scheme works in a similar way to the Help to Buy: mortgage guarantee scheme, but takes into account the different way that a HPP is structured. It will enable banks to purchase a guarantee for their Home Purchase Plans where the consumer has a deposit of between 5% and 20%. The guarantee will compensate the bank for a portion of net losses suffered in the event of default. This will reduce their risk of offering home finance to consumers with a low deposit. The original scheme was launched in October 2013 in order to increase the availability of low-deposit finance for UK households.
Samir Alamad commented:
"The launch of the Help to Buy: HPP guarantee scheme represents an important step for the UK Islamic finance industry. By adapting the original mortgage guarantee scheme, HPP providers and customers can benefit from the same Government support that mortgage lenders and borrowers have enjoyed. It has introduced a level playing field for Islamic banks and consumers alike, and IBB is delighted to have been working closely with the Government to pioneer this exciting development.”
The Financial Secretary to the Treasury, Sajid Javid, said:
“I am delighted Home Purchase Plans will now be available under the Help to Buy scheme. This gives even more choice to hardworking families across the UK trying to fulfil their home owning aspirations.”
