Interest-free home financing for Muslims

A straightforward path to a halal home

Interest-free home finance exists in the UK and it is getting easier to access. Instead of a loan that charges interest, most British providers use Home Purchase Plans that combine joint ownership with a rent-like payment for the share you do not yet own. Over time, your equity grows until you take full ownership. The cashflow can feel similar to a conventional mortgage, but the structure avoids interest and follows principles that many Muslims find more ethically aligned.

The UK market remains relatively small compared with conventional mortgages, yet it is growing. There are five UK Islamic banks and more than twenty institutions offering Islamic products. Providers such as Gatehouse Bank, StrideUp and new FCA-authorised fintech entrants like Offa are widening choice, including digital-first journeys that suit first-time buyers. Government action since the early 2000s removed double stamp duty on common Sharia structures and the regulator now oversees authorised firms, which helps put buyers on a more equal footing and strengthens protections.

It is important to set expectations. Prices can be competitive, but they are not always the lowest. Legal complexity and product design can affect fees and rent rates. What you get in return is faith-compliant ownership, transparent Sharia governance and a growing set of ethical options backed by a strong UK Islamic finance hub in London. For many households, that balance of values and clarity matters as much as a headline rate.

If you have looked before and felt confused by jargon, you are not alone. This guide keeps things in plain English. We explain how Home Purchase Plans work, what they cost, who is eligible and how to compare providers safely under UK rules. Our aim is to help you make a confident, well-informed decision that fits your needs and your values.

The goal is simple: a halal route to owning your home, with clear steps and no jargon.

Who this guide will help

If you want to buy a home in Britain without paying interest, this guide is for you. It suits Muslim buyers seeking Sharia compliance, as well as anyone who prefers ethical, asset-backed finance. It is also useful for parents helping adult children with a deposit, self-employed buyers who need a clear process, and higher-net-worth buyers considering larger properties who want confidence in governance and provider strength. Mortgage brokers new to Islamic products may also find the plain-language explanations and comparison points helpful.

Your main choices today

1. Home Purchase Plan - diminishing partnership with rent on the provider’s share.
2. Rent-to-own with fixed review periods - lease-based structure with scheduled rent reviews.
3. Shared ownership with a halal structure - combine a housing association share with a Sharia-compliant plan.
4. Buy-to-let style HPP - for investors seeking ethical property finance.
5. Bridging-style Islamic finance - short-term halal funding for chain breaks or refurbishments.

What it could cost and what it means

Eligibility in plain English

Most providers look at affordability in the same careful way as mainstream lenders, but with a different structure. You will need a steady income, a minimum deposit, and clean credit with no recent serious defaults. Self-employed applicants are typically asked for two years of accounts or SA302s. Visa and residency rules apply as they would for conventional products, and some providers impose regional property or valuation limits. If you receive income from benefits, some plans can count a portion, but policies vary, so early disclosure helps.

Because the agreement is a co-ownership arrangement, you will usually be responsible for buildings insurance and maintenance, while the provider sets conditions for alterations. Expect standard valuation and legal checks, with conveyancers who understand Islamic structures. That specialist legal knowledge can save time and reduce costs.

If you prefer a brokered route, independent advisers with Islamic finance experience can compare Gatehouse Bank, StrideUp, Offa and others side by side. Some marketplaces and partner platforms, including services like Kandoo, can connect you to authorised advisers and tools to estimate affordability across halal options. Always confirm that the firm and the product are authorised by the FCA or arranged by an authorised intermediary, so you benefit from UK consumer protections.

From offer to ownership - the simple steps

1. Check affordability and set a realistic budget.
2. Save a deposit and gather ID and income proofs.
3. Compare authorised HPP providers and product terms.
4. Obtain a decision in principle for confidence.
5. Instruct a solicitor experienced in Islamic finance.
6. Submit full application and property details.
7. Property valuation and legal work are completed.
8. Sign agreements, pay deposit, and complete purchase.

Benefits and trade-offs at a glance

Take a breath - key checks before you commit

Before you proceed, read every document in full, including rent review schedules, maintenance obligations and early purchase terms. Ask for the Sharia certificate and the names of the independent scholars or board members who oversee the product. Confirm that both the firm and the product are authorised or arranged by an FCA-authorised intermediary. Compare total cost over the period you expect to hold the plan, not just the starting rent rate, and run a higher-rate scenario to test affordability. If you plan to move or repay early, model the impact of exit fees or notice periods. Choose a solicitor with experience in Islamic home finance and agree clear timelines. A short conversation now can prevent delays and unnecessary costs later.

Alternatives to consider

1. Conventional repayment mortgage with ethical screening of lender investments.
2. Shared ownership via a housing association with conventional finance.
3. Family assisted purchase - gifted deposit or private halal partnership.
4. Remortgage of another property to release equity for a cash buy.
5. Rent-and-save strategy to build a larger deposit before applying.

Common questions, clear answers

Q: Is a Home Purchase Plan regulated in the UK? A: Yes. UK providers offering HPPs are typically authorised and regulated by the FCA. Always check the Financial Services Register and your documentation.

Q: Is stamp duty different on an HPP? A: The UK removed the historical double tax treatment that affected common Islamic structures. Today, most buyers face similar stamp duty outcomes to conventional purchases.

Q: Are rates fixed or variable? A: The rent element can be fixed for a period or variable. Check how and when reviews happen, any caps, and what notice is given before changes.

Q: Can I overpay to buy more equity? A: Many plans allow scheduled or ad hoc staircasing. Limits and fees vary, so confirm your allowance each year and any minimum increment.

Q: What properties qualify? A: Most standard residential properties are eligible. Some providers exclude new builds, ex-local authority or certain leasehold terms, or set maximum property values by region.

Q: What happens if I fall behind? A: Providers must follow UK arrears guidance. Speak early to arrange forbearance where possible. Ultimately, the property can be repossessed if payments remain unpaid.

Q: Who are the main UK providers? A: Active names include Gatehouse Bank, StrideUp and fintech providers such as Offa, among others. Availability and criteria change, so compare current options.

Ready to explore your options

If you want a calm, no-pressure conversation, Kandoo can connect you with FCA-authorised advisers who understand Islamic Home Purchase Plans. They will explain costs in plain English, compare current UK providers and help you apply with confidence when you are ready.

Important information

This guide is for general information only and is not personal advice. Product availability, pricing and eligibility change. Always check FCA authorisation, read all documents carefully and seek professional advice before committing.