Help to Buy extended to include Islamic Mortgages

Published on

help-to-buy

The government’s Help to Buy mortgage guarantee scheme can now also be used by providers of Home Purchase Plans.

Home Purchase Plans (HPPs) are a Sharia law compliant alternative to mortgages and are often known as ‘Islamic Mortgages’.

From today the rules have been amended to enable banks that sell HPPs to purchase a government guarantee for them. Additionally, the Islamic Bank of Britain has outlined its intention of participating to offer Home Purchase Plans under the scheme.

Sajid Javid, Financial Secretary to the Treasury, 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.

“Under an HPP, a property’s ownership is split between the customer and the bank. After buying a portion of the property with their initial deposit, the purchaser of the property pays regular instalments to the bank, covering rent for the portion they do not own and an acquisition payment. In this way, a customer gradually buys the property from the bank and eventually becomes the sole owner.

“In order to purchase the government guarantee, banks will have to satisfy the same stringent criteria for an HPP as for a normal mortgage. HPPs sold in the UK are also subject to regulation by the Financial Conduct Authority (FCA), in much the same way as mortgages.”

COMMENT ON MORTGAGE SOUP

We want to hear from you!
Leave a comment and get the conversation started.
You need to register to post, so please login or sign up below.

Latest articles

Rental market divides as London supply squeeze drives up rents

Average advertised rents outside London have exceeded £1,400 a month for the first time,...

More homes within reach but 5% mortgage rates hold buyers back

More than half of two and three-bedroom houses are now within reach of households...

Lenders Live: Flexible lending, fees and remortgage surge

Building societies should use technology to improve service while retaining the flexibility that helps...

High-value homes and London flats face tougher selling conditions

Properties valued at £2 million or more are taking more than twice as long...

Staveley brings ‘sax appeal’ to Mortgage’s Got Talent

Mortgage industry PR guru Debbie Staveley is the latest name to join the line-up...

Latest publication

Other news

Rental market divides as London supply squeeze drives up rents

Average advertised rents outside London have exceeded £1,400 a month for the first time,...

More homes within reach but 5% mortgage rates hold buyers back

More than half of two and three-bedroom houses are now within reach of households...

Lenders Live: Flexible lending, fees and remortgage surge

Building societies should use technology to improve service while retaining the flexibility that helps...