
Where can I get an Islamic Mortgage in the UK in 2024? | Market Overview
03 September 2024 5 min read
4 min read
Published:
Updated:
Haider Saleem
The primary reason why many scholars believe Islamic mortgages are halal is that they are a partnership-based model rather than an interest-based loan.
Our view at IFG is that Islamic mortgages that are available in the UK are halal and a great solution for now, but there are improvements that can be made.
Under a conventional mortgage, most people take out what are called repayment mortgages. This is where every month you pay the bank both:
You’re paying interest – exchanging money for money. This is a major sin in Islam.
You can find other arguments on our forum thread on this topic here.
There are significantly fewer scholars in this camp. The most prominent and recent amount them from the UK is Shaykh Atabek Shukurov. He argues here and here that conventional mortgages should not be understood as the classic riba-based debt in Islamic law.
We at IFG respectfully disagree. You can read about this here.
You can’t justify getting a conventional mortgage by saying “it is a necessity for me to buy a house and the cheapest way is a conventional mortgage”. Two reasons why:
Secondly, you can’t justify getting a conventional mortgage by arguing that it is essentially just like a murabaha transaction. This mischaracterises conventional finance and would open the floodgates to basically rendering large swathes of conventional finance as halal.
Finally, it’s not ok to get a conventional mortgage if you can’t afford an Islamic one. Mortgages are almost always haram – read more here.
An Islamic mortgage is structured as a Home Purchase Plan (HPP). This is so you avoid paying interest.
There are three types of HPPs:
We’ve written a lot about these three HPP’s here. But find a short summary below:
The bank purchases the property you want to buy and leases it to you for a fixed term, at an agreed monthly cost. When the term is over, full ownership of the property will be transferred to you.
Absolutely not. We’ve written about this a lot, like here.
If you’re genuinely want to stay away from riba when it comes to buying a home, an Islamic mortgage is your best option today. You can compare between the available Islamic banks here.
However, we need to:
03 September 2024 5 min read
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