Halal mortgages

What is a halal mortgage?

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A halal ‘mortgage’ is a financial product designed to help Muslims purchase property without the need to borrow money.


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Therefore, they aren’t really mortgages at all; in fact, Islamic or halal mortgages are more accurately referred to by most providers as home purchase plans (HPPs). 

Why do people take out halal mortgages? 

Islamic or halal home purchase plans are popular because borrowing and lending money in exchange for interest is forbidden under Sharia law. 

This means that mainstream mortgages are not appropriate for Muslims, who have previously struggled to find ways to get a foot on the property ladder.

Halal mortgages are now available from a variety of providers and, like ordinary mortgages, are regulated by the Financial Conduct Authority (FCA). 

How do halal mortgages work? 

Halal mortgages do not involve borrowing money. 

Instead, under a Sharia-compliant HPP, your bank will purchase your property on your behalf and then either lease it back to you or levy a profit on top of the purchase price, subsequently allowing you to pay back the sum total in instalments. 

Whichever type of HPP you choose, your provider will make money - but they’ll do so in a way that is in line with Muslim teachings.

Where can I find a halal mortgage? 

Halal mortgages, or HPPs, are available from a variety of providers including Al Rayan Bank (formerly known as the Islamic Bank of Britain) and UBL UK.


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