Yasmin, 29, and Tariq, 30, first-time buyers in Birmingham, have a £40,000 deposit and want to buy a three-bedroom house for £240,000 near Tariq's parents. The couple, who describe themselves as Muslim but not particularly strict, face pressure from Tariq's devout parents to use a Sharia-compliant mortgage. Tariq's mother said she would not feel comfortable visiting or eating in their home if it was bought with 'haram' money.
What is a Sharia mortgage?
A Sharia-compliant home purchase plan (HPP) avoids interest (riba), forbidden in Islam. The bank buys the property alongside you, and you pay rent on the bank's share while buying it back over time. The most common structure is Diminishing Musharaka (diminishing partnership). UK Sharia-compliant providers are regulated by the Financial Conduct Authority.
The financial difference
For a £200,000 mortgage on a £240,000 property (83% LTV), a conventional mortgage at 4.5% from Yorkshire Building Society would cost approximately £1,112 per month over 25 years. A Sharia-compliant product from Gatehouse Bank at 6.48% would cost £1,348 per month. That is a difference of £236 a month, or £2,832 a year. Over a two-year fixed period, the Sharia option costs over £5,000 more in monthly payments alone.
According to Metro's consumer champion Sarah Davidson, 'It is entirely reasonable for you to balk at paying it.' She notes that while the gap has narrowed, Sharia mortgages remain significantly more expensive.
The religious perspective
In Islam, charging or paying interest (riba) is strictly forbidden and considered a major sin. Gatehouse Bank research in 2024 found that three quarters of Muslim consumers would accept a higher price for Islamic finance products. The government-backed MoneyHelper service advises those with doubts to speak to an Imam or independent Islamic scholar.
Davidson advises the couple to sit down together and decide their boundaries. If the £236 monthly premium is unaffordable, they should present it as a financial reality, not a rejection of faith. Some families compromise by having parents subsidise the difference. 'A £3,000 annual saving is a hollow victory if it costs you your family's support,' she warns.
