A halal mortgage is a way to buy a home without paying or receiving interest. In the UK, these products are usually called Home Purchase Plans (HPPs). Instead of lending you money, the provider buys the property with you. You pay rent on the share it owns and buy that share over time until the home is yours.
Halal home finance is offered in the UK by a small number of specialist providers, including StrideUp, Gatehouse Bank, and Kuwait Finance House. This guide explains how the products work, what they cost, how they are regulated, and how to choose one.
What Is a Halal Mortgage?
Islam prohibits riba, usually translated as interest: any increase charged on a loan. A conventional mortgage is a loan with interest charged on it, so many Muslims will not take one.
Islamic finance links profit to trade or to ownership of a real asset, rather than to lending money. It also avoids contracts with excessive uncertainty and does not finance activities considered harmful under Islamic principles, such as alcohol, gambling, tobacco, and pornography.
A halal mortgage applies these principles to buying a home. Each product is reviewed and certified by independent Sharia scholars. That certification is separate from the product’s financial regulation.
How Do Halal Mortgages Work In the UK?
Most UK Home Purchase Plans follow the same pattern:
- You pay a deposit, which becomes your initial share of the home
- The provider buys the rest of the property and owns that share
- You live in the home and pay rent on the provider’s share
- Alongside the rent, you make payments to buy more of the provider’s share
- As your share grows, the rent falls until you own the home outright
Your monthly payment therefore has two parts: rent and an acquisition payment that increases your ownership. The rental rate is usually fixed for an initial period, often two or five years, and then moves to the provider’s variable rate.
Types of Halal Mortgages
#1. Diminishing musharakah (co-ownership with leasing)
This is the most common structure in the UK and the one described above. You and the provider buy the home together as partners. You gradually buy out the provider’s share while renting the part you do not yet own, under an ijara (lease) agreement that sits alongside it.
#2. Ijara (lease)
The provider owns the property and leases it to you. In a rent-only ijara, your monthly payments are rent alone, and you buy the provider’s share at the end of the term, with a lump sum or by selling the property. It works in a similar way to an interest-only arrangement and is used mainly for buy-to-let.
#3. Murabaha (cost-plus sale)
The provider buys the property and sells it to you at a higher, fixed price, which you pay in installments. For example, a provider might buy a £100,000 property and sell it to you for £125,000, paid over 20 years. The mark-up is agreed at the start and does not change. Murabaha is rarely used to buy a home in the UK today and is more common in other countries and in commercial finance.
How Much Deposit Do You Need?
Minimum deposits usually start at 5–10% for a home you will live in, depending on the provider and product. Buy-to-let usually needs at least 20%.
A larger deposit gives you a bigger initial share, and providers usually offer lower rental rates at lower finance-to-value (FTV) levels. Many providers accept gifted deposits from family, usually with a letter confirming the money is a gift and not a loan.
What Does a Halal Mortgage Cost?
Your costs typically include:
- Monthly payments: rent on the provider’s share, plus acquisition payments
- A product or arrangement fee
- A valuation fee
- Legal fees for your own solicitor, and usually for the provider’s solicitor too, because the provider is buying the property with you
- Stamp Duty, where it applies
Pricing can be higher than a conventional mortgage, mainly because Sharia-compliant providers are smaller and fund themselves differently. The gap has narrowed as providers have accessed institutional funding. When you compare products, look at the total cost over the fixed period, including fees, rather than the headline rate alone.
Do You Pay Stamp Duty Twice?
No. Because the provider buys the property and you then buy its share over time, buyers once risked paying Stamp Duty twice. The Finance Act 2003 introduced relief for alternative property finance so the tax is charged once, and in 2015 the relief was extended to Home Purchase Plan providers that are not banks.
In England and Northern Ireland, Stamp Duty Land Tax is charged on the same basis as a conventional purchase. The standard threshold is currently £125,000, with reliefs available for some buyers. Check the current rates and reliefs on GOV.UK. Scotland and Wales have their own property taxes.
Are Halal Mortgages Regulated?
Home Purchase Plans for a home you live in are regulated by the Financial Conduct Authority (FCA), in the same way as conventional mortgages. Providers must be authorised, and if something goes wrong, you can complain to the Financial Ombudsman Service. You can check any firm on the FCA Register.
Buy-to-let purchase plans, like conventional buy-to-let mortgages, are generally not regulated by the FCA.
Sharia compliance is a separate question. The FCA does not rule on whether a product is Sharia-compliant; that is the job of the provider’s independent Sharia scholars or advisory firm, who certify the product.
What Are the Risks?
- If you do not keep up your payments, your home may be repossessed, as with a conventional mortgage
- After the initial fixed period, your rental rate usually moves to the provider’s variable rate, so your payments can go up
- Early payment charges may apply if you overpay above an allowance or settle early during a fixed period
- Not every property qualifies: providers have criteria on property type, lease length, and location
Which Providers Offer Halal Mortgages in the UK?
#1. StrideUp
StrideUp is a UK Sharia-compliant home finance provider. It offers Home Purchase Plans for homebuyers and Buy-to-Let Purchase Plans for landlords, for both purchase and refinance. StrideUp is authorised and regulated by the Financial Conduct Authority, and its Home Purchase Plan is certified as Sharia-compliant by Amanah Advisors.
- Deposits from 10% for homebuyers (up to 90% finance to value, up to £1m) and from 20% for buy-to-let
- Up to four applicants, with all incomes considered, and no minimum income requirement
- Self-employed applicants considered from one year’s trading
- Buy-to-let finance for standard lets, HMOs of up to 12 bedrooms, and multi-unit freehold blocks of up to 10 units
- Same-day decision in principle
StrideUp funds its plans through institutional capital markets. In 2025, it completed Meridian Funding 2025-1, a £308 million Sharia-compliant securitisation, which won RMBS Deal of the Year and Specialist RMBS Issuer of the Year at the GlobalCapital European Securitisation Awards 2026. Sifted ranked StrideUp the 5th fastest-growing fintech in the UK and Ireland in 2025, and it is rated 4.8 (“Excellent”) on Trustpilot from 214 reviews (as at 12 November 2026).
StrideUp has also ranked 12th in the Deloitte UK Technology Fast 50 Awards, recognising the 50 fastest-growing technology companies in the UK.
Your home may be repossessed if you do not keep up the payments on your home purchase plan. StrideUp is the trading name of StrideUp Homes Limited, authorised and regulated by the Financial Conduct Authority (FRN 785299). Buy-to-Let Purchase Plans are not regulated by the Financial Conduct Authority.
#2. Gatehouse Bank
Gatehouse Bank offers Home Purchase Plans and buy-to-let finance, with up to 95% finance to value on some products for UK residents only.
#3. Kuwait Finance House (formerly Al Ahli United Bank UK)
Kuwait Finance House offers Home Purchase Plans and buy-to-let finance and can consider income earned in currencies other than sterling.
#4. Al Rayan Bank
Al Rayan Bank, which describes itself as the UK’s oldest and largest Islamic bank, has scaled back its retail Home Purchase Plan range in recent years. Check current availability with the bank directly.
Product ranges and criteria change often, so check current availability with each provider before you apply.
Providers That No Longer Offer Halal Mortgages
- HSBC: launched HSBC Amanah home finance in 2003, the first high-street bank in the UK to do so, and closed its UK Islamic finance operations in 2012
- Lloyds: offered Islamic home finance and a Sharia-compliant current account; both have since been withdrawn, the current account in 2018
- Al Buraq: Arab Banking Corporation’s Islamic home finance, offered with Bristol & West, is no longer available
How to Choose a Halal Mortgage
- Check the product is certified by a recognised Sharia advisory firm or board
- Check the provider is authorised, using the FCA Register
- Compare the total cost over the fixed period, including every fee
- Check the criteria: deposit, types of income accepted, number of applicants, and property types
- Find out what happens at the end of the fixed period and whether you can overpay
- Consider speaking to a broker who arranges Sharia-compliant home finance
Frequently Asked Questions
What Deposit Do I Need for a Halal Mortgage?
Most providers ask for between 5% and 20% for a home you will live in. StrideUp’s minimum is 10%. Buy-to-let usually needs at least 20%.
Is Buying a House With an Interest-Bearing Mortgage Haram?
Most contemporary scholars hold that a conventional mortgage is not permissible because the interest charged on the loan is riba. A minority view, set out by the European Council for Fatwa and Research in 1999, allows it in narrow circumstances of need, but that view is contested. For a ruling on your own situation, speak to a qualified scholar.
Is It Haram to Have a Bank Account?
Opinions differ. Many scholars accept a current account that pays no interest where there is a need for one, and Sharia-compliant accounts are also available. A qualified scholar can advise on your circumstances.
Is a Halal Mortgage More Expensive Than a Conventional Mortgage?
It can be, but not always. Compare the total cost over the same fixed period, including fees, rather than the headline rate.
Can Non-Muslims Get a Halal Mortgage?
Yes. Providers assess applications against their lending criteria, not the applicant’s faith.
Do I Pay Stamp Duty Twice on a Halal Mortgage?
No. Relief introduced in 2003 means Stamp Duty is charged once, on the same basis as a conventional purchase.
