What is a halal mortgage?

Halal mortgages – or Islamic mortgages – offer a home-buying route that aligns with your faith and values. While most mortgages involve interest payments, halal options work differently. Instead of borrowing money and paying interest, you and the bank essentially buy the property together, and you grow your share over time.

It’s technically not a mortgage in the traditional sense, but a Sharia-compliant Home Purchase Plan (HPP). Think of it as a co-ownership arrangement: you put down a deposit, the provider covers the rest, and you gradually buy out their share. Until then, you pay rent for the portion they own. It’s available to Muslims and non-Muslims.

Just have a small deposit to put down? That could be fine, as some Halal mortgage lenders allow you to borrow up to 95% of a property’s value (or 90% for new-build flats) although some lenders do require bigger deposits.

Are you eligible for a halal mortgage?

Only a small number of lenders offer Islamic mortgages and, as with any other type of home finance product, the lending criteria varies between providers. Generally, here’s what they’ll check:

Your income

Lenders will look at what you earn when deciding how much to lend, but up to 4.5 times your income, subject to affordability, is typical for Islamic mortgage alternatives.

Affordability

You'll need to demonstrate that you can comfortably afford all your mortgage payments, in addition to your other financial commitments like utilities and childcare, for example.​

Credit history

Whilst there isn’t a specific credit score required for a mortgage, having a higher score can boost your chances of being approved. It might be worth checking to see if there is anything you can do to improve your report before you apply for a mortgage.

Every lender’s a bit different, so it’s very important to compare your options to find the right fit for your situation.

How much can I borrow with a Halal mortgage?

Many mortgage lenders offer up to around 4.5 times your annual earnings, though some may allow you to borrow more. Going off the typical figure, if you earn £40,000, you might be able to borrow up to £180,000. If you apply jointly with someone earning £30,000, that total could rise to £315,000.

Just bear in mind that your final offer will depend on factors like your affordability, existing borrowing and deposit size. Income’s just part of the picture. Here’s what else a lender might look at when assessing your application:

  • Monthly outgoings: Lenders will consider your regular expenses like bills, credit card payments and childcare costs to make sure the mortgage is affordable for you both.

  • Affordability stress tests: Lenders will check if you could afford your mortgage if rental rates rise.

  • Deposit: The more equity or deposit you have, the better. A lower finance-to-value ratio could help you access a better deal.

  • Creditworthiness: A solid credit report can really boost your chances of approval, so be sure to check it ahead of your application to see if there is anything you can do to improve your score.

One more thing… your home could be repossessed if you don’t keep up repayments on your mortgage, so make sure you’re comfortable with what you can afford before taking the plunge.

What costs should I budget for when arranging a Halal mortgage?

When applying for a mortgage, remember there are a few costs you’ll need to keep in mind to avoid any surprises:

  • Valuation fees: Lenders will want to know your property's value, so they'll arrange a valuation. Costs can vary, but it's wise to budget for this.​

  • Legal fees: Whether it's a solicitor or conveyancer, you'll need legal help to navigate the process.​ Legal fees for home buying are typically around £2,000 (including VAT at 20%), but the exact cost can vary depending on the property and how complex the work is.

  • Local searches: If you’re buying a property, your solicitor will also carry out local searches – usually costing £250–£300.

  • Arrangement fees: Some lenders charge a fee to set up your mortgage. Expect to pay anywhere between £1,000 to £2,000 or more. ​

  • Early repayment charges (ERCs): Planning to pay off your mortgage early? Be aware of potential ERCs, which can apply if you overpay beyond a certain limit.

  • Survey costs: If you're considering a detailed property survey, this will be an additional expense to keep in mind.​

By considering all of these costs, you can keep your mortgage process running smoothly without any unexpected financial bumps along the way.

Mortgage guides

Answering your questions about halal mortgages

Page updated on 8th August 2025, Reviewed by Richard Groom