Islamic Finance for Property
Updated 14 April 2026
All requests for Islamic Finance are on a referral only basis
Islamic Finance for Mortgages: Your Guide to Halal and Sharia-Compliant Solutions with Mortgage One
For many individuals in the UK, owning a home is a key life goal. However, for those following Islamic principles, finding a mortgage that complies with Sharia law can seem challenging. Islamic finance prohibits paying or receiving interest (riba), which is central to most conventional mortgage products.
At Mortgage One, we understand the importance of aligning financial decisions with your faith. That’s why we work with selected, fully Sharia-compliant mortgage providers. We do not advise on Islamic mortgages directly, but can refer you to an approved provider who specialises in Sharia-compliant finance.
In this guide, we explain how Islamic mortgages work, the types available, and how Mortgage One can refer you to a suitable provider for your needs.
Think carefully before securing your debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
What Is an Islamic Mortgage?
An Islamic mortgage differs from conventional mortgages as it adheres to the principles of Sharia law, particularly the prohibition of riba (interest). Rather than charging interest, Islamic mortgages rely on alternative financial structures that allow individuals to purchase homes in accordance with Islamic teachings.
Common structures used in Sharia-compliant mortgages include:
Diminishing Musharaka (Co-Ownership): The customer and the provider both contribute toward the purchase price and share ownership of the property. Each month, the customer makes payments that gradually increase their share while the provider’s share diminishes. This is the most widely used structure for residential Islamic home finance in the UK.
Ijara (Lease-to-Own Agreement): The lender buys the property and leases it to the buyer. Rental payments are made over time, and ownership transfers to the buyer once the agreed total is paid.
For a detailed comparison of how these structures differ in terms of ownership, payments and legal title, see Mortgage One’s guide to Islamic home finance structures.
Murabaha (Cost-Plus Financing): The lender purchases the property and then sells it to the buyer at a higher price, which includes a profit margin. The buyer repays this amount over an agreed period.
How Islamic Mortgages Work
Islamic mortgages allow individuals to acquire property without engaging in interest-based transactions. Instead, they involve joint ownership or structured leasing arrangements.
Mortgage One does not offer Islamic mortgage advice. We can refer you to a third-party provider that specialises in fully Sharia-compliant mortgage solutions tailored to your circumstances.
Why Mortgage One Refers You to a Sharia-Compliant Provider
Faith-Compliance: Our referral partners are approved providers of Sharia-compliant mortgages, ensuring alignment with Islamic financial principles.
Specialist Expertise: These providers offer detailed guidance and product options designed specifically for customers seeking interest-free property finance.
Transparent Referral Process: We clearly explain our role as a referrer and ensure you are directed to a provider who can assist appropriately.
Next Steps: Referral Through Mortgage One
If you’re seeking a Sharia-compliant mortgage, contact Mortgage One today. We will refer you to an authorised provider of Islamic mortgage products who can support your needs. Whether you’re exploring home ownership for the first time or reviewing your current arrangements, we will help connect you with a firm that understands Islamic finance.
For more on ownership, regulation and what to check before committing, see Mortgage One’s guide to halal mortgages in the UK.
Back to Islamic Finance and Halal Mortgages
The information provided in this article is for general guidance only and does not constitute personal or regulated financial advice. If you’d like to understand what these moves could mean for you, speak to Mortgage One. We can explain your options and timings based on your specific circumstances.
Some Buy to Let mortgages are not regulated by the Financial Conduct Authority.
FAQs
1. Does Mortgage One advise on Islamic mortgages?
No. Mortgage One refers all Islamic finance enquiries to a specialist third-party provider. We do not advise on Sharia-compliant products directly, but we can connect you with a provider who does.
2. What is the most common Islamic finance structure for UK homes?
Diminishing Musharaka is the most widely used structure for residential property in the UK. It involves shared ownership between the customer and provider, with the customer’s share increasing over time through monthly acquisition payments.
3. Do I need a larger deposit for Islamic home finance?
Deposit requirements vary by provider, but they can be higher than for conventional mortgages. The specific amount depends on the property value, the provider’s criteria and the customer’s financial circumstances.
4. Is Islamic home finance regulated in the UK?
Where the product is structured as a Home Purchase Plan, it is regulated under the Mortgages and Home Finance: Conduct of Business sourcebook. This includes affordability assessments, pre-application disclosure and access to the Financial Ombudsman Service.
5. Can I use Islamic finance for a buy-to-let property?
Some providers offer Diminishing Musharaka and Ijara structures for investment property. The specific terms and eligibility criteria may differ from residential Home Purchase Plans and should be confirmed with the specialist provider.
6. How long does the referral process take?
Once you submit your enquiry through the Islamic Finance contact form, Mortgage One will refer you to the specialist provider promptly. The overall timeline depends on the provider’s own application process and the complexity of your circumstances.
7. Will I pay more Stamp Duty Land Tax with Islamic finance?
The legislation provides relief for qualifying alternative finance arrangements, so that the Stamp Duty Land Tax consequences are intended to mirror those of a conventional mortgage where the statutory conditions are met. Your solicitor should confirm eligibility before exchange.
