The government announced in February the launch of its Help to Buy home purchase plan (HPP) after consultation with the Islamic finance industry, but the first product has not been announced until today.
The IBB mortgage is available up to 90% funds-to-value at a rental rate of 4.99%, this is fixed 31 December 2017.
An administration fee of £999 is charged to all customers taking out this product. The bank typically charges £399 but said the higher fee was due to the costs involved in taking part in the scheme.
This is the first time the Islamic Bank of Britain has been able to finance 90% of a property, its previous funds-to-value limit was 80%.
Sultan Choudhury, the bank’s chief executive officer, 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.”