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Which UK Banks Offer Islamic Mortgages?

Searching for the best UK banks that offer Islamic mortgages? Then this quick guide will provide you with everything you need to know.
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Islamic mortgages (also known as Sharia-compliant mortgages) are a niche product and only a few lenders in the UK offer them.

However, because the Muslim population in the UK is steadily growing, these types of mortgages are in demand. Hence, more and more lenders are stepping into the domain of Islamic mortgages.

Today, we’re going to take a quick look at which UK banks offer Islamic mortgages. We’ll also look at some lenders who don’t provide Islamic mortgages just to clear up any confusion.

UK Banks That Offer Islamic Mortgages

Let’s start with a list of popular UK Banks that offer Sharia-compliant mortgages.

1. Al Ahli

This is the UK branch of NCB, one of the largest banking groups in the Middle East. This lender has been offering Islamic mortgages for many years, and their client base consists of people looking to buy top-notch properties in premium locations such as London.

So, while their products mostly cater to the more affluent population, they do offer some of the best rates. This makes them very attractive for Islamic mortgage holders who want to refinance.

2. Gatehouse

Established in 2007, Gatehouse has already started offering Islamic mortgages. Its market capture strategy is aggressive, and it wants to grow fast in the sector. Hence, it offers competitive rates and terms.

3. QIB UK

This is yet another bank that offers Sharia-compliant financing for Muslims as well as Non-Muslims. QIB UK provides all kinds of halal mortgages such as the Musharaka, Ijarah, and Murabaha.

Private Lenders Offering Islamic Mortgages

In case you can’t get a Sharia-compliant mortgage from the above banks, here are some trusted private lenders to try. You can also connect with our mortgage advisors for more details.

1. Wayhome

Previously called Unmortgage, Wayhome is not exactly a bank but a lender that offers Islamic mortgage alternatives. They provide borrowers with a shared ownership model, which lets borrowers buy a home with just a 5% deposit, no fees, and no interest.

2. Strideup

Strideup is another lender that offers halal home finance alternatives for those looking at Sharia-compliant mortgages. Started in 2017, Strideup has made great progress in the field and is planning to launch a buy-to-let alternative as well.

3. Heylo Housing

Heylo is an Islamic mortgage alternative that offers a shared ownership model that lets you buy back as much share of the property as you want. Usually, Heylo is considered a suitable option for people who aren’t able to get an Islamic mortgage with a traditional bank.

Keep in mind, however, that Heylo’s rates are arguably a little high, so your overall cost will be higher. But from the perspective of Sharia compliance, they are a good choice, as they don’t force you to buy back the lender’s portion of the house.

Banks Which Don’t Offer Islamic Mortgages

Now that we’ve seen which banks and private lenders offer Islamic mortgages let’s also take a quick look at some of the prominent banks that don’t offer Islamic mortgages. 

This way, you can skip these in your search and save some time.

1. Lloyds Bank

Lloyds used to offer Islamic current accounts and mortgages, but these services were discontinued. 

2. HSBC Bank

One of the largest banks in the UK, HSBC used to offer Islamic mortgages under the brand of Amanah Finance. However, this brand was closed down and HSBC has not offered Islamic mortgages in the recent past.

3. Al Rayan Bank

Previously known as the Islamic Bank of Britain, this bank was once considered a forerunner in the Islamic Mortgage market in the UK. However, currently, they have withdrawn their Islamic mortgage products.

Frequently Asked Questions (FAQs)

1. Is it possible to apply for an Islamic Mortgage with a low credit score?

This depends on the lender to a large degree. While some lenders lay extra emphasis on good credit scores, others may consider factors such as income stability and loan affordability as more important and be flexible within their criteria. It’s best to discuss your financial situation with the lender or your mortgage advisor.

2. Is it possible to switch from a regular mortgage to an Islamic Mortgage?

Yes, it is, but you’ll need to be approved by the Islamic lender first. The process typically involves refinancing your traditional mortgage with an Islamic bank, according to the new terms and conditions.

3. What if I miss payments on my Islamic mortgage?

In the case of missed payments on an Islamic mortgage, the bank will take the necessary legal steps to recover the due amount, as in a traditional mortgage. However, since this is an Islamic mortgage, all such steps taken will be in line with Sharia laws and may involve negotiations and payment restructuring. 

In case you find you can no longer carry out the usual payments, make sure you contact your lender and discuss the matter as soon as possible.

Our goal is simple - to provide most up-to-date and accurate mortgage information to make your mortgage journey as stress-free as possible. Have a question? Fill up the quick form and one of our mortgage advisor will connect with you.

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