What is the ruling of the Help to Buy equity loan?


What is the ruling of the Help to Buy equity loan?


In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Help to Buy is a new government-backed initiative in the UK set up to help first time buyers and those looking to move up the property ladder, to purchase a property with as little as a 5% deposit.

With a deposit of 5%, the Help to Buy Equity Loan scheme allows one to borrow an additional 20% of the purchase price of the property from the government.

The borrower will not be charged ‘loan fees’ for the first 5 years of owning your home.

In the 6th year, the borrower is charged a fee of 1.75% of the loan’s value. After this, the fee will increase every year. The increase is worked out by using the Retail Prices Index plus 1%.

These loan fees are clear interest.  Any conditional increase on a loan is interest and impermissible.

Therefore, it is not permissible to enter into the Help to Buy Equity Loan Scheme.

And Allah Ta’ālā Knows Best

Mufti Faraz Adam al-Mahmudi,

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