IBB's support to the Government for the scheme was headed by
The Financial Secretary to the Treasury,
HPPs are Shari'ah compliant, ethical mortgage alternatives, available to consumers of all faiths and beliefs. They differ from a mortgage where the customer borrows money from a lender which is then repaid with interest. A HPP uses the Islamic finance principles of co-ownership (Diminishing Musharaka) with leasing (Ijara), where the Islamic bank and the customer buy the property as partners and the customer pays rent on bank's share in the property. At the end of the term, when all acquisition payments have been made and the finance has been settled, ownership of the property transfers fully to the customer.
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 per cent and 20 per cent. 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
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