Help to Buy ‘Islamic’ mortgages

Help to Buy ‘Islamic’ mortgages

Government’s Help to Buy scheme now available for Muslim borrowers who want a Shariah law compliant mortgage.

HPPs split ownership of a property between the borrower and their bank, a financing arrangement that accords with Islamic law that prevents muslims from using conventional mortgages that see borrowers paying interest to a lender.

Muslim borrowers will be allowed to apply for “Islamic mortgages” under a   change to the Government’s Help to Buy scheme aimed at extending the range   of home buyers able to access taxpayer-backed funding.

From Tuesday home buyers will be allowed to use Home Purchase Plans (HPP) to   access the scheme, meaning that Muslim borrowers who want a Shariah law   compliant mortgage will be able to use the facility.

HPPs split ownership of a property between the borrower and their bank, a   financing arrangement that accords with Islamic law that prevents muslims   from using conventional mortgages that see borrowers paying interest to a   lender.

Sajid Javid, Financial Secretary to the Treasury, will launch the updated   scheme this morning at an Islamic finance conference in London as the UK   attempts to become a major centre for the growing market for   Shariah-compliant finance.

“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,” said Mr Javid.

Last month, the Bank of England was forced to deny claims that its Governor,   Mark Carney, had been pushing to limit the scheme and wanted to reduce the   valuation threshold.

The International Monetary Fund last year questioned the wisodom of Help to   Buy, warning that it could do more harm than good.

Members of the Treasury Select Committee has also criticised the scheme and   the idea of encouraging buyers with a deposit of as little as 5pc from   borrowing money to buy a property.

The Government has denied Help to Buy is stoking a property boom and has the   said is designed to help new buyers on to the property ladder.

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