Halal Mortgages & Islamic Property Finance
Islamic property finance, often called a halal mortgage, Islamic mortgage or Home Purchase Plan (HPP), is a Sharia-compliant alternative to a conventional mortgage. Instead of borrowing money and paying interest (riba), you buy the property in partnership with the finance provider, or the provider buys it and leases it to you, and you build up full ownership over time.
Every transaction is based on a real asset, shared risk and ethical financial principles, and each product is certified by the provider’s independent Sharia supervisory board.
Home Purchase Plans are regulated by the Financial Conduct Authority, so you receive the same regulatory protections as a conventional mortgage customer, including access to the Financial Ombudsman Service.
WHY CHOOSE US
Trusted guidance from experienced Islamic finance specialists
- Qualified advisors with expertise in Sharia-compliant finance
- Personalised consultation based on your financial situation
- Clear, honest and transparent advice at every stage
- Support for first-time buyers and complex cases
- Deep understanding of UK Islamic mortgage products
- Long-term financial planning beyond just property purchase
Access to leading UK Islamic finance providers
- Wide panel of Sharia-compliant lenders
- Comparison of multiple Home Purchase Plans
- Access to competitive and specialist products
- Solutions for employed and self-employed clients
- Up-to-date insights on market trends and rates
- Matching your profile with the right lender criteria
A complete, stress-free property finance journey
- Full application management from start to finish
- Assistance with all required documentation
- Direct communication with lenders and solicitors
- Regular updates throughout the process
- Fast and efficient handling to avoid delays
- Ongoing support after completion (remortgage & advice)
Our Islamic Finance Services
How Does a Halal Mortgage Work?
A halal mortgage achieves the same outcome as a conventional mortgage, owning your home, but through a completely different structure. There is no loan and no interest. Instead, UK providers use three main Sharia-compliant structures.
Diminishing Musharaka (Co-Ownership)
The most common structure for UK Home Purchase Plans. You and the provider buy the property together, for example 20 per cent you and 80 per cent the provider. Each month you pay rent on the provider’s share and buy a little more of it, so your ownership grows and the rent falls until you own the property outright.
Ijara (Lease-to-Own)
The provider buys the property and leases it to you for a fixed term. Your monthly payments combine rent with instalments that go towards acquiring the property, and ownership transfers to you at the end of the term.
Murabaha (Cost-Plus Sale)
The provider buys the property and sells it to you at an agreed, fixed profit, repaid in instalments. Because the total price is fixed on day one, Murabaha is more often used for commercial deals and short-term property finance.
Whichever structure fits your situation, you have the exclusive right to live in or let the property from day one, and every product is certified by the provider’s independent Sharia supervisory board.
Halal Mortgage Rates: How Pricing Works
Sharia-compliant home finance does not charge interest, so there is no interest rate. What you pay instead is a rental rate on the share of the property the provider owns. In practice it behaves much like a mortgage rate, and it is what you compare between providers.
What determines your rental rate
Four things move the price more than anything else. The size of your deposit matters most, because rates are banded by how much of the property you are buying outright, and each band you move up usually brings the rate down. The type of plan comes next, as residential home purchase plans are priced differently from buy-to-let, non-resident and bridging products. Then there is how long you fix for, with providers offering fixed rental periods alongside variable rates tracking a published benchmark. Finally your own circumstances and the property itself feed in, covering income, credit history, whether you are employed or self-employed, and the construction and use of the property.
Fixed or variable rental rate?
A fixed rental rate holds your payment steady for an agreed period, which makes budgeting straightforward and protects you if benchmark rates rise. A variable rate moves with the provider’s published benchmark, so payments can fall as well as rise. Which one suits you depends on how long you expect to stay in the property and how much payment certainty you need, and it is one of the first things we will talk through with you.
Are halal mortgage rates competitive?
Rental rates on UK home purchase plans are broadly comparable with conventional mortgage pricing, and the gap has narrowed considerably as more providers have entered the market. Pricing varies meaningfully between providers, though, and the cheapest headline rate is not always the cheapest overall once product fees, valuation costs and early repayment terms are counted.
Getting a current quote
Rates change frequently and the products available to you depend on your circumstances, so we do not publish a rate table that could be out of date by the time you read it. Call us on 020 4511 9511 and we will source live, whole-of-market Sharia-compliant pricing for your situation and set out the total cost of each option, not just the headline rate.
Your home may be repossessed if you do not keep up repayments on a mortgage, home purchase plan or any other debt secured on it.
Ethical Finance You Can Trust
Islamic finance is built on fairness, transparency and shared responsibility. Unlike conventional mortgages, it avoids interest-based lending and promotes risk-sharing between the provider and the customer.
Our goal is to provide solutions that are not only compliant, but also practical, competitive and aligned with your long-term financial wellbeing.
Halal Mortgages UK: Frequently Asked Questions
Is a halal mortgage really Sharia-compliant?
Yes. Every UK Home Purchase Plan is designed and certified by an independent board of Islamic scholars, and providers publish their Sharia compliance certificates. We can talk you through how each product achieves compliance so you can decide with confidence.
How much deposit do I need for a halal mortgage?
Residential Home Purchase Plans are available across the market with deposits starting from around 5 per cent, depending on the provider and your circumstances. A larger deposit usually means a lower rental rate. Buy-to-let plans typically require a larger deposit.
Is Islamic finance more expensive than a normal mortgage?
Not necessarily. Rental rates on Home Purchase Plans are often competitive with conventional mortgage rates, and pricing varies between providers and products. Our job is to compare the whole Sharia-compliant market and find the strongest deal for your deposit and circumstances.
Can non-Muslims use halal finance?
Yes. Islamic finance is open to everyone. Many customers choose it for its ethical foundations, transparency and the absence of interest-based lending.
Will I legally own my home?
Yes. You have the exclusive right to live in the property from day one, your ownership share grows as you pay, and full ownership transfers to you once the plan is complete.
Are halal mortgages regulated in the UK?
Yes. Home Purchase Plans are regulated by the Financial Conduct Authority as regulated home finance products, which means you benefit from FCA consumer protections and access to the Financial Ombudsman Service.
Regulated, Certified and Independent Halal Finance Advice
The UK is home to a mature Islamic finance market, with fully authorised Islamic banks and specialist Sharia-compliant funders offering home purchase plans, buy-to-let finance, bridging and commercial finance. Every provider we introduce is authorised and regulated by the Financial Conduct Authority, and every product carries certification from an independent Sharia supervisory board.
Because SM Finance is independent of any single provider, we compare the market and recommend the structure and provider that fit your deposit, income and long-term plans, whether you are a first-time buyer, a home mover, a landlord, a business owner or buying from overseas.
Your home may be repossessed if you do not keep up repayments on a mortgage, home purchase plan or any other debt secured on it.
Sharia-Compliant Lenders We Work With
SM Finance is independent of any single provider. We compare the Sharia-compliant market and place business with the UK’s established Islamic banks and specialist halal funders, so your recommendation is based on what suits you rather than on who we are tied to.
We also arrange Sharia-compliant finance through StrideUp, Nomo Bank and Offa, who between them cover home purchase plans, Islamic buy-to-let, non-resident and expat finance, and halal bridging.
Lender names and logos are shown to identify the providers we can approach on your behalf. All lenders are authorised and regulated by the Financial Conduct Authority. Product availability depends on your circumstances and each lender’s criteria.
Start Your Halal Home Ownership Journey Today
Speak to our expert advisors and discover the most suitable Sharia-compliant property finance solution for your needs.