Compare UK halal home purchase plans, deposits, and providers. See how costs stack up, what eligibility looks like, and practical next steps to decide confidently.
A clear look at halal home costs
Halal home purchase plans give UK buyers a way to own property without paying interest. Instead of interest, providers use rent or a profit mark-up aligned with Sharia principles. The structure is different to a conventional mortgage, and so are the costs you will face over time. That is why the right question is not just what the rate is, but what the total you will pay looks like across the years.
In Great Britain the main models are Ijara, Murabaha, and Diminishing Musharakah. Each avoids riba, but each treats ownership and monthly payments differently. Some plans let you build equity gradually while paying rent on the bank’s share. Others sell the property to you at a fixed marked-up price, repaid in instalments. Understanding the mechanics is the key to avoiding surprises.
You should also expect different deposit rules. Many halal plans ask for 10-35% up front. Some providers accept 10%, a few go as low as 5% with stricter criteria, while others expect nearer 20%. That higher entry point reflects a smaller market and the way these products are set up. On the other hand, the shared-ownership style used in Musharakah can feel fairer because the risk is split.
Competition is improving. Gatehouse Bank is the largest UK provider and has options from 5% deposits for eligible borrowers. StrideUp has reduced rates in 2024-2025 and accepts gifted deposits from close family. Offa, authorised by the FCA in 2025, brings more choice to the market. Wayhome sits nearby with a 5% minimum deposit but caps ownership at up to 40% initially. More providers usually mean sharper pricing over time.
Tax changes in 2025 have also helped. Updates to UK rules around capital gains and certain property charges have removed friction where a financier needs to buy and then lease the property to you. That makes Islamic home purchase plans more comparable with standard mortgages on the tax side, even if practical processes can still feel slower.
The simple test: add up the total over the deal period, including rent or profit elements, fees, and any buy-out payments.
Bottom line: compare total payable, not just the headline rent or profit rate.
Is this right for you?
This guide suits UK residents who want to buy or refinance a home in a way that aligns with Islamic principles or broader ethical preferences. If interest-based borrowing does not sit comfortably with you, halal home purchase plans offer a credible alternative that is regulated in the UK.
It is also helpful if you are weighing deposits of 5-20% or more, comparing eligibility criteria, or simply trying to make sense of different halal models. Even if you are not Muslim, you may prefer shared-risk structures and screened investments that avoid certain industries.
Your main choices
- Ijara - bank buys the property, you pay rent and gradually acquire equity through separate purchase payments.
- Murabaha - the bank buys and sells to you at a marked-up price, repaid in fixed instalments.
- Diminishing Musharakah - you co-own with the bank, pay rent on their share, and buy out their share over time.
- Gatehouse Bank - broad UK range, selected 5% deposits, strict criteria.
- StrideUp - halal-certified HPPs, 10% minimum deposit, gifted funds allowed.
- Offa - new FCA-authorised provider in 2025, expanding UK options.
- Wayhome - 5% minimum deposit with ownership capped initially, alternative co-ownership model.
What it could mean for your wallet
| Option | Typical upfront | Ongoing cost shape | Potential benefit | Key risks |
|---|---|---|---|---|
| Ijara | 10-25% deposit | Rent on bank share plus equity payments | Flexibility to adjust equity build | Higher fees vs conventional, early exit costs |
| Murabaha | 15-35% deposit | Fixed instalments including profit | Payment certainty, clear total price | Large upfront, less flexible mid-term |
| Diminishing Musharakah | 10-25% deposit | Rent reduces as equity grows | Shared risk, aligns with stewardship | Valuation, admin fees, affordability tests |
| Conventional mortgage (comparator) | From 5% deposit | Interest payments, may vary | Wider choice, often cheaper | Interest exposure, rate volatility |
Remember to include product fees, legal costs, surveys, and any early settlement amounts when comparing.
Who can qualify?
Eligibility criteria vary by provider, but expect UK residency, a clean credit record, and provable income that supports the plan’s affordability checks. Lenders will assess property type, location, and valuation. Flats, new builds, and ex-local authority homes can be acceptable, but criteria are often tighter than with mainstream mortgages.
Deposits are usually higher for halal plans. Many providers ask for 10-35% of the purchase price. Some, like StrideUp, will accept a gifted deposit from close family, subject to documentation. Gatehouse has offered 5% deposit options for eligible borrowers, but these come with stricter assessments and may be limited to certain applicants or property values.
Be prepared for additional fees covering administration, legal work on dual transfers, and Sharia board oversight. These costs reflect the structure of the plans rather than hidden charges. If you are comparing across the market, a broker with halal expertise can help you line up like-for-like figures. If you prefer a simple start, Kandoo can connect you with regulated partners who understand these products and can explain the trade-offs in plain English.
From enquiry to keys
- Check budget, deposit size, and monthly comfort zone.
- Shortlist providers and models that fit your needs.
- Secure an Agreement in Principle for affordability clarity.
- Instruct a solicitor familiar with Islamic finance structures.
- Complete valuation, legal checks, and Sharia compliance steps.
- Review total payable, fees, and early settlement terms.
- Exchange contracts once conditions and timings are confirmed.
- Complete, receive keys, and set up payments correctly.
Weighing it up
| Model | Pros | Cons |
|---|---|---|
| Ijara | Flexible equity build, clear rent separation | Admin-heavy, potential early exit costs |
| Murabaha | Fixed total price, predictable payments | Higher deposit, less flexible mid-term |
| Diminishing Musharakah | Shared risk, rent falls as equity rises | Fees, valuations, buy-out complexity |
Before you apply
Go beyond the headline rent or profit figure. Ask your provider for a total cost illustration across the initial term and the full term, including all fees and any buy-out payments. Check how early settlement is handled in practice, not just in principle. Understand whether rent is linked to a benchmark that can change and how often reviews happen. Look closely at property criteria, particularly for flats, new builds, and non-standard construction.
If you are aiming for a 5-10% deposit, check whether stricter affordability, lower maximum loan sizes, or limited postcodes apply. For gifted deposits, confirm the paperwork and proof of funds required to avoid delays. Finally, factor in moving costs, insurance, and an emergency fund. A realistic budget is what keeps the plan comfortable once the keys are in your hand.
Alternative routes
- Conventional repayment mortgage - widest choice, potentially lower cost if interest is acceptable.
- Shared Ownership scheme - buy a share, pay rent on the rest through a housing association.
- Wayhome-style co-ownership - 5% deposit with ownership capped initially, step-up over time.
- Family support - gifted deposits or family-assisted options, subject to checks.
- Lifetime ISA - boost first-time buyer deposit with a government bonus.
Frequently asked questions
Q: Are halal home purchase plans regulated in the UK? A: Yes. UK providers offering home finance to consumers are authorised and regulated by the Financial Conduct Authority, and products are overseen for Sharia compliance.
Q: Why do halal plans often cost more than mortgages? A: Smaller market size, extra legal steps, and administration lead to higher fees. Pricing is charged as rent or profit rather than interest, but the total can be higher.
Q: How much deposit will I need? A: Many plans require 10-35%. Some accept 10%, and a few offer 5% with tighter criteria. StrideUp allows gifted deposits from close family, subject to checks.
Q: Which providers should I look at first? A: Gatehouse Bank, StrideUp, and Offa are key names in the UK. Wayhome is an alternative co-ownership route. Compare criteria, deposits, and total cost projections.
Q: What changed in 2025 for tax? A: Reforms removed certain frictions where a financier buys and leases the property to you. That improves the competitiveness of Islamic plans, though processes can still be slower.
Q: Is Diminishing Musharakah more ethical? A: It shares ownership and risk, and screens out prohibited activities. Many buyers value the stewardship approach beyond purely religious reasons.
What to do now
If halal home finance feels right, start by pinning down your budget, deposit, and property goals. Then compare total costs across at least two providers. Kandoo can introduce you to regulated specialists who understand Islamic structures and will present clear, like-for-like figures so you can decide with confidence.
Important information
This guide is general information, not advice. Eligibility, rates, and criteria change over time and by provider. Always check Key Facts documents and obtain personalised illustrations before you commit. If in doubt, seek regulated advice.
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