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Frequently Asked Questions
Find clear answers to common questions about halal investing, Islamic home purchase plans, and other Sharia-compliant products. We focus on providing educational clarity and transparency to help you navigate your options.
Important Note: We are an information and referral platform. We do not provide personal financial advice. If you require expert guidance, we connect you with FCA-authorised and regulated advisers who can support your specific needs.
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General & Sharia Compliance
What is the core difference between halal finance and conventional finance?
The fundamental difference is the avoidance of interest (riba). Halal finance focuses on shared risk and reward via asset-backed transactions, rather than lending money for a profit through interest.
How do you ensure Sharia compliance?
We only refer to platforms and providers that have clear Sharia supervisory boards. Our educational content prioritises transparency and follows established Islamic financial principles of fairness.
Are your recommended partners independent?
Yes. We believe it is important that you receive independent, unbiased advice. That is why our recommended partners are independent and have access to the whole market. They will always act in your best interests, helping you find the solution that is most suitable for your needs.
Home Purchase Plans
What is a Home Purchase Plan (HPP)?
An HPP is a Sharia-compliant alternative to a mortgage. Typically based on Co-ownership (Musharaka) and Leasing (Ijara), you and the provider buy the property together, and you gradually buy the provider's share while paying rent.
Is an HPP more expensive than a conventional mortgage?
The costs are structured differently (rent vs interest) but often reflect current market rates. The benefit is adherence to your faith and a partnership structure rather than a debt-based one.
Why are Sharia compliant finance products benchmarked against the Bank of England Base Rate?
It is crucial to note that Sharia allows the use of benchmarks as long as they are commonly acknowledged and accessible. For Islamic finance, using a benchmark is a significant aspect as lenders must ensure that their products and prices are transparent and conform to the local market. That is why they use widely recognised indices, such as BBR (Bank of England Base Rate), to price their products and satisfy these critical requirements.
If banks were to use local rental market rates, there would be too much variance across the country and local economies and therefore would not be able to offer consistent and fair pricing across the country for all customers.
It is important to add that, with leases the rent is reviewed periodically. When the benchmark rate increases or decreases, the rent charged to you is adjusted accordingly. At future rent reviews, the bank will also take into account any additional acquisition payments when assessing the new rent figure. The bank will write to you and confirm any changes in good time.
Who holds the legal title with Home Purchase Plans?
It is a requirement for the Islamic Bank to issue the lease which will grant you the right to occupy the property in accordance with the laws of England and Wales. Although the freehold title will be held by the lender, your rights, including your beneficial share, will be safeguarded by registering the long leasehold in your name at the Land Registry. In the case of leasehold properties, the Bank's name will be registered as the owner of the long leasehold, while the sub-lease will be registered in your name. Since the property is being leased to you, you will not immediately become the legal owner, but you will become the legal owner once you have acquired the lender's share in the property.
Do I ever own the property with a Home Purchase Plan?
Initially at the start of the finance agreement, you and the Bank jointly own the property. With every Home Purchase Plan payment you make, your equity in the property increases and the rental element decreases, reducing the Bank’s share on a diminishing basis. At the end of the term, ownership of the property transfers to you outright.
Why is there two solicitors dealing with the property purchase or refinance?
To ensure compliance with the Sharia principles and applicable law, the Law Society suggests that for Islamic finance transactions, two sets of solicitors are involved. One set of solicitors represents you; the other set of solicitors represents the lender.
Can I switch from a conventional mortgage to a Shariah compliant bank?
In short, yes. This process is similar to a new purchase and will require a full mortgage application. For Home Purchase Plans, your adviser will need to have the HPP permission to give you advice and act on your behalf.
Investing & Savings
What makes an investment 'halal'?
Halal investments avoid 'Haram' industries (like alcohol, gambling, interest-based finance) and meet specific financial ratios regarding debt and interest-bearing income.
Do I have to pay for an initial meeting?
No, the first meeting is at our recommended independent financial adviser’s (IFA’s) expense. During this meeting, they will gather your information, listen to your objectives, and discuss how they can support you in achieving them. Following the meeting, they will provide you with a plan and outline any fees so you can decide if they are the right independent financial adviser to help you move forward.
Do you manage my money?
No, we do not provide personal financial advice or money management services. We provide education and refer you to FCA-regulated professionals who can provide specific advice.
Process & Next Steps
What happens after I contact you?
We will review your enquiry and, where appropriate, introduce you to a qualified Sharia finance professional who is regulated by the FCA to discuss your specific needs.
How do you get paid?
We aim for complete transparency. Some partners may pay us a referral fee, which helps us keep our educational resources free for everyone. This does not affect the cost to you.
Still have questions?
Navigating Sharia-compliant finance can be complex. Reach out today to speak with our team or schedule a consultation with a regulated finance expert to get the clear answers you need.