Finding home finance that aligns with Islam is a priority for many UK Muslim homebuyers. However, as interest (Riba) is prohibited under Sharia law, a standard mortgage isn’t usually an option.
The good news is that there are Islamic finance sectors available from multiple lenders in the UK. We look at which Sharia-compliant providers offer Home Purchase Plans (HPPs), how they can be structured, and how to ensure you choose the most suitable for your needs.
What is a Sharia Mortgage Lender?
A Sharia mortgage lender provides property finance without the use of Riba. Instead they offer Home Purchase Plans (HPPs) which is where the Sharia-compliant lender acts as more of a landlord for the home buyer.
Instead of borrowing a sum of money, like with a loan, you enter into a contract where the lender buys the property alongside the homebuyer. This means that monthly payments are made up of a combination of rent and capital acquisition, without any interest charges.
There are typically three structures to choose from in UK HPPs:
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Diminishing Musharaka (Co-Ownership) - The buyer and the lender buy the property together as partners. The home buyer pays the lender rent on the portion they own, but each monthly payment includes a "capital" element,which gradually buys the lender’s share. As the home buyer’s ownership grows, the rent owed decreases proportionally until the home is owned outright by the buyer, similarly to the UK shared-ownership scheme
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Ijara (Lease to Own) - Often for Sharia-compliant buy-to-let transactions, this lease-and-transfer structure involves the lender purchasing the entire property and leases it to the buyer for a set term. A fixed rent is paid during this set term, but an additional agreement ensures that at the end of this term, the purchase price is paid and the legal title of the property is transferred to the buyer
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Murabaha (Cost Plus Profit) - This option involves the lender buying the property and selling it to the purchaser immediately at an agreed higher price. For example, if the house costs £300,000, the lender might sell it back to the buyer for £450,000. This profit is charged in lieu of interest, and the buyer pays the full amount back to the lender in monthly installments. This can be used for residential purchase, but is more common for commercial property
Because these products are intended for different uses, not all Sharia lenders will offer all 3 types of HPP product. This is why it’s important to speak to a broker that specialises in Islamic home finance practices, like ourselves.
Leading Sharia mortgage lenders in the UK
As a more niche lending product, there are fewer lenders offering Sharia-compliant mortgages than standard mortgages in the UK. However, there are a growing number to choose from, including:
1. Gatehouse Bank
A Fully Sharia-compliant bank who offers HPPs for both home purchases and buy-to-let. Although designed for Muslim homebuyers, their product range is available to anyone in the UK looking for an ethical mortgage lender. They also offer Green products, and are not allowed to invest in gambling, alcohol or arms
2. Al Rayan Bank
As the oldest Islamic bank in the UK, they offer both standard and high-net-worth clients the full range of HPP options, including Diminishing Musharaka, Ijara and Murabaha
3. StrideUp
Are a newer Sharia-compliant lender that offers a bridge between renting and owning. Their fully digital model allows for lower deposits (starting at 10%) compared to some traditional Islamic banks, making them popular with first-time buyers
4. UBL UK (United National Bank)
Predominantly focus on Sharia buy-to-let and commercial lending, often catering to those with more complex income structures. They are popular with portfolio landlords who require Islamic finance options. They also provide foreign national HPP plans for those investors based outside of the UK but looking to purchase property here
5. Ahli United Bank
Now operating as Kuwait Finance House (UK), this lender focuses on high-net-worth property finance and wealth management. They offer Sharia-compliant residential, buy-to-let and commercial HPP options for purchases up to the value of £45m
6. Habib Zurich
While not a fully Islamic bank, their Sharia arm provides commercial finance options to investors looking for a Islam-friendly option in the UK and across Europe
7. Offa
A newer, tech-driven mortgage lender fully authorised by the FCA in 2025, the specialise in fast, digital-first bridging finance and HPPs for Islamic buy-to-let. Due to their speedy process, they may also be helpful to those looking for auction finance
Get matched with your ideal Islamic mortgage lender
Do high street lenders offer HPP plans (Sharia mortgages)?
Major UK high-street lenders do not currently offer Sharia-compliant mortgages. This is largely due to the administrative complexity and the specialist Sharia supervisory boards required to oversee these products.
In the UK this lending niche is dominated by specialist Islamic banks, such as those outlined above. They typically offer a more tailored service than high street banks, which doesn’t use tickbox exercises or computer algorithms to approve home finance applications.
How to find the right Sharia Compliant mortgage lender for you
To find a Sharia Compliant lender offering the right HPP for you, it’s best to seek advice from a broker with experience in this type of finance. While there are not as many lenders in the UK offering this type of product as those offering traditional mortgages, a broker like ourselves can help ensure you’ve considered all options available to you.
Get started today to speak to one of our Islamic home finance experts.
FAQs
While interest rates aren't used by Sharia lenders, they charge rental rates which can sometimes be slightly higher than the lowest interest rates on a typical high street mortgage. However, for many borrowers, the ethical alignment and the transparency of fixed-profit or rental models outweighs this small difference in monthly cost.