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Sharia Compliant
Home Purchase
Plans
If you're exploring a halal mortgage, you're usually looking at a Home Purchase Plan (HPP). Understand how it works, what you’re actually agreeing to and which option fits your situation.
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Halal Mortgages
Home Purchase Plan (HPP)
If you’re searching for a halal mortgage in the UK, what you usually mean in practice is a Home Purchase Plan (HPP) - a structure designed to avoid a conventional interest‑based mortgage.
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This page explains how HPPs work, the two main structures you’ll see in the UK (Diminishing Musharakah and Ijara), what to look out for before you commit, and the next step if you want to move forward.
Home Purchase Plans
 A Home Purchase Plan is a Shariah‑compliant route to buying property that is structured differently from a conventional mortgage. Instead of borrowing money and paying interest, the arrangement is built around property ownership and/or leasing—so what you pay each month is not framed as interest on a loan.
In simple terms, most HPPs are designed so that:
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the provider buys the property (or buys it with you), andÂ
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your monthly payments are made up of (1) an ownership element and (2) a rental element for the provider’s share.
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That difference matters, because the structure affects how ownership is treated, how payments are described, and what happens if you exit early.
The two main HPP structures in the UK
While providers label their products differently, most Shariah-compliant Home Purchase Plans (HPPs) in the UK follow one of two underlying models. Understanding these structures is key to knowing how your ownership evolves over time and how your monthly costs are calculated.
1. Diminishing Musharakah
This is widely described as the most commonly used halal Home Purchase Plan structure in the UK. You and the provider co‑own the property. Over time, you gradually buy more of the provider’s share. As your ownership increases, the provider’s share decreases.Your monthly payment typically includes:• Acquisition / purchase payments (to increase your ownership), and• Rent on the share still owned by the provider.
2. Ijara Structure
A lease-based model where the provider buys the property and leases it to you for a fixed period. Your payments act as rent, with ownership typically transferring at the end of the term when the initial capital is repaid in full unless the property is sold. While the outcome is the same, the legal mechanics of transfer differ from Musharakah.
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Home Purchase Plan Journey
Most HPP journeys follow a similar pattern. Our seamless process ensures Shariah-compliance at every stage.
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Eligibility & AIP
Speak with one of our recommended FCA qualified Advisers to confirm your eligibility, obtain an agreement in principle.
Application & Valuation
Choose a property and your adviser will submit an application. Underwriting and valuation will commence.
Purchase & Structure
The provider purchases the property with you (co‑ownership) or leases it to you (Ijara).
Monthly Payments
Payments are split between an ownership-building element and a rental element for the provider’s share.
Ownership Transfer
Gradually buy out the provider’s share (Musharakah) or follow the lease-to-own mechanism (Ijara).
Why people choose a Home Purchase Plan (HPP)
People usually consider HPPs because they want a route to home ownership that avoids interest-based mortgages, while working within the UK property system. When comparing providers, the most useful questions are practical ones rather than abstract concepts.
Structure: Diminishing Musharakah (co-ownership) vs Ijara (lease-based).
Rent: How it is calculated and whether it is subject to change.
Exit terms: Conditions for selling or exiting early vary by structure.
Costs: Valuation, legal, arrangement, and early settlement fees.
A broker-style approach ensures you avoid common mistakes and compare the factors that truly impact your agreement.
Up to 7x income
Supporting borrowers afford more where suitable.
1 year self-employed
Considered with supporting evidence.
Flexible residency
Subject to individual provider criteria.
Note: Criteria vary by provider and are subject to change. This information is for high-level illustrative purposes only and does not constitute personal financial advice.
Up to 90% FTV
Starting with as little as a 10% deposit.
Multiple incomes
Accepted including bonus, overtime and second jobs.
Up to 4 applicants
Useful for collective family purchases.
Up to 40-year term
Maximising first-time buyer affordability and budget.
Gifted deposits
Accepted from close family subject to checks.
£75,000 to £5M
Typical finance range across UK providers.
Is an HPP right for you?
An HPP may be suitable if you want a halal route to buying a home that prioritizes clarity and avoids interest.
- want a halal route to buying a home in the UK
- prefer a structure based on ownership/lease rather than interest
- want clarity on how payments work and what you’re committing to
It may be less suitable if you need maximum flexibility or haven’t checked the provider’s early exit terms and fees.
Frequently Asked Questions
Is a Home Purchase Plan the same as an Islamic mortgage?
While often used interchangeably, an HPP is structurally different from a conventional loan. Since interest (Riba) is prohibited in Islam, an HPP uses Diminishing Musharakah (co-ownership) or Ijara (leasing). You are buying the property with a provider rather than borrowing cash to purchase it alone.
What are the main HPP structures in the UK?
Most UK providers use Diminishing Musharakah, where you and the provider own shares that shift in your favor over time. Another option is Ijara, a lease-and-ownership transfer model. Both structures are FCA-regulated and verified by Shariah boards to ensure full compliance with Islamic financial principles.
What do I pay each month on an HPP?
Your monthly payment consists of two parts: an acquisition payment to buy more of the provider's share and a rental payment for the share you don't yet own. As your ownership grows, the rental portion typically decreases. This ensures your journey to property ownership remains entirely halal and transparent.
Is my home at risk if I don’t keep up payments?
Yes. Just like a conventional mortgage, your home may be repossessed if you do not keep up your payments under a Home Purchase Plan. It is vital to ensure your plan is affordable for your budget. A qualified adviser can help you find a sustainable structure that aligns with your financial goals.