Welcome to Our FAQs Page

We understand that you may have questions, and our FAQs page is here to provide you with clear and concise answers. Whether you're looking for details about our services, policies, or general information, we've compiled the most common queries to save you time and effort. If you can't find the answer you're looking for, please don't hesitate to get in touch with us. We're here to help make your experience as smooth as possible.

What are the different types of Islamic mortgages?

There are three main Sharia compliant mortgages in the UK, with Musharaka (partnership) being the most popular for residential purchase. Iljara (lease), and Murabaha (profit) also available, but more often used in commercial transactions.

 

Is my Islamic mortgage Sharia compliant?

Lenders offering Islamic mortgages use the guidance of scholars who are experts in Islamic finance and Sharia law to make sure their products are Sharia compliant.

They also carry out regular reviews in partnership with Islamic scholars to ensure that any changes to the products are assessed and authorised by Sharia law.

Islamic mortgages are regulated by the Financial Conduct Authority (FCA), meaning customers have the same protection and rights as those customers taking out an interest-charging mortgage.

 

What fees will I need to pay with an Islamic mortgage?

There are similar fees involved with an Islamic mortgage as traditional mortgage fees, such as:

  • An administration cost - similar to a mortgage arrangement fee 

  • Valuation fees

  • Legal fees

  • Stamp duty

  • Broker fee

 

Do I need a specialist solicitor/conveyancer?

Islamic conveyancing process is different to the general UK process, using a solicitor with experience in Islamic finance can help you to avoid unnecessary delays.

Is an Islamic mortgage more expensive than a conventional mortgage?

They can be, as Sharia-compliant lenders have higher administration costs than mainstream mortgage lenders and fewer lenders overall mean that there is less competition in the market.

Do you have to pay stamp duty twice with an Islamic mortgage?

No you don’t, this law was changed in 2003 to prevent customers being charged both when the bank bought the home and when they bought it back from them. You will only pay stamp duty in line with the normal UK thresholds.

Could I pay higher than local market rental rates?

As Sharia law calls for consistency and the avoidance of uncertainty in their lending practices, they need a common factor to base rental payments on across the board, regardless of where in the country the property is located. 

Islamic lenders typically use the recognised benchmarks of either Bank of England Base Rate or LIBOR  to meet this requirement under Sharia law and ensure that the entire process is halal.

What are the advantages and disadvantages of an islamic mortgage?

Advantages:

  • You can still own your own home whilst respecting Islamic law

  • You still benefit from FCS protection

  • They are available to both Muslims and non-Muslims

  • There are no early repayment charges

  • You repay the value your property was at the time of purchase, regardless of inflation or a rise in house prices

Disadvantages:

  • There are fewer Islamic mortgage lenders, meaning less competitive pricing

  • The deposit requirement can be higher than for traditional mortgages

  • Rent is not charged in line with local prices (so can be higher than typical for the area) Rent can fluctuate based on an agreed external factor, usually LIBOR or the Bank of England base rate

  • If you fall behind with your payments, you can be fined and are still at risk of having your home repossessed if you fail to repay them

  • If you want to sell your home, you will need to repay the lender first