Halal Options | Islamic, Mortgage Alternatives

Shariah-compliant (Islamic) alternatives to mortgages for home and other property finance needs in the UK. For anyone who needs to avoid interest.

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Assalamualaikum w w. Which Islamic home purchase plan would you recommend to someone from Scotland? Please respond asap. Jazakallahu khairan.

​Wa Alaikum Assalam wa Rahmatullahi wa Barakatuh.

​When it comes to securing Shariah-compliant property finance in Scotland, the options differ slightly from England and Wales due to distinct differences in Scottish property law and land registration.

​Currently, the availability of standard retail Home Purchase Plans (HPP), such as Diminishing Musharakah (co-ownership), is highly restricted or unavailable from the UK's mainstream Islamic retail banks for properties located in Scotland. This is primarily because standard HPP legal structures are heavily tailored to English property law.

We can however assist residents of the GCC countries to purchase property in Scotland under the Commodity Murabaha structure. Get in touch if this is what you need

[Book appointment with our Islamic property finance specialist]

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what are my options for a remortgage, from a conventional banking mortgage to one of your products?

​Yes, it is entirely possible to switch from a conventional interest-bearing mortgage to a fully Shariah-compliant structure. This process involves replacing your current conventional arrangement with an alternative finance product.

​Depending on whether the property is residential or commercial, your main options typically include:

​Diminishing Musharakah (Co-Ownership): This model is commonly used for residential properties. You and the financier own the property jointly. Over time, you gradually buy out the financier’s share while paying a rental fee for the portion you do not yet own, eventually achieving full ownership.

​Commodity Murabaha (Cost-Plus Profit): Often utilised for commercial finance or specific structures, where the financier purchases a commodity and sells it to you at a deferred, agreed cost-plus-profit price.

​Key Considerations Before Making the Switch:

​Early Redemption Charges (ERCs): Check if your current conventional lender charges a penalty for leaving your current term early. Obviously from a shariah point of view we would say you need to switch at all cost.

​Eligibility & Criteria: Our team will review your property type, value, and personal financial circumstances to find the most suitable structure with our panel of alternative finance providers.

​As every situation is unique, we recommend arranging a consultation to explore your options in detail.

​[Click here to book an appointment with Halal mortgage alternative expert]

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Can I remortgage my commercial property which has been paid in full, to purchase another commercial property or land? Via halal means?

​Yes, this is entirely possible, subject to terms and conditions.

​To structure this type of Sharia-compliant finance, our finance providers utilise the Commodity Murabaha model. If you are looking to release equity from your fully paid commercial property to fund a new purchase, the key criteria are as follows:

​Minimum Finance Amount: £200,000

​Maximum Finance-to-Value (FTV): Capped at 70%

​Because commercial structures can be complex, we highly recommend booking an appointment with our team to discuss the specific details of your property and investment goals.

​[Click here to book an appointment with an Islamic Finance specialist]

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how can I cancel my phonecall appointment?

​To cancel or change your scheduled phone appointment, please follow these quick steps:

​Open the confirmation email or calendar invite you received when you booked the session.

​Scroll to the bottom and click on the "Cancel" or "Reschedule" link.

​Confirm your choice on the page that opens up, and your booking will be automatically updated.

​If you cannot find your confirmation email, just send us an email amd let us know your full name and the booked time, and we can cancel it for you from our end.

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Surah Ar-Rum 30:39

Tafseer (Mufti Taqi Uthmani): Ma'ariful Qur'an 30:39

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Surah An Nisa 4:161

Tafseer (Mufti Taqi Uthmani): Ma'ariful Qur'an 4:161

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Surah Aale-Imran 3:130

Tafseer (Mufti Taqi Uthmani): Ma'ariful Qur'an 3:130

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Surah Al-Baqarah 2:279

Tafseer (Mufti Taqi Uthmani): Ma'ariful Qur'an 2:279

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Surah Al-Baqarah 2:278

Tafseer (Mufti Taqi Uthmani): Ma'ariful Qur'an 2:278

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Surah Al-Baqarah 2:276

Tafseer (Mufti Taqi Uthmani): Ma'ariful Qur'an 2:276

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Surah Al-Baqarah 2:275

Tafseer (Mufti Taqi Uthmani): Ma'ariful Qur'an 2:275

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✅ DLA payments for dependants as income

If you are receiving Disability Living Allowance for a dependent and you were previously told it can not be included in your income calculation, resulting in a failed affordability assessment, this has now changed!

We can now include the allowance as income, provided that the allowance is for the benefit of the applicant's dependent and not anybody else.

We feel this is a more common sense approach because affordability assessments include the expense of providing for the dependants, so why not allow all the income received on their behalf? And when the dependant is old enough that the parent no longer receives the benefit, the same child will no longer be a dependant for affordability purposes either 🤷🏻‍♂️

Note: This has always been an allowable practice when the benefit is for the actual applicant. It was only a problem when the benefit was for children.

In line with our ongoing commitment, we will persistently advocate for the enhancement of criteria and simplification of processes to facilitate Muslims in securing property financing in accordance with Islamic principles.

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We have become Generation Riba. We like this new ad from Wahed Invest.

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Question:

After much thought, I have decided to leave interest-based finance. What should I do now? What happens to the mortgage and the property?

Answer:

Allah says: “And those who, when they do an evil thing or wrong themselves, remember Allah and implore forgiveness for their sins—Who forgives sins save Allah only?—and will not knowingly repeat (the wrong) they did.” (Quran 3:135)

The Prophet (Allah bless him and give him peace) said in a rigorously authenticated (sahih) hadith: “There is no one who commits a sin, goes and performs ritual ablutions, and then prays two rakats after which they seek Allah’s forgiveness except that He forgives them.” (Tirmidhi)

Imam Nawawi says in Riyad al-Salihin: “Sincere repentance consists of abstaining from the sin instantly, having a firm intention not to be involved in that sin again and being remorseful and regretful of one’s actions.”

One takes the means to extricate oneself from the mortgage: one would be religiously obligated to remove oneself from the situation, and when not reasonably possible, to repay the loan as quickly as possible by the most effective means available to one; most readily by reducing one’s expenditure and, if possible, taking interest-free loans from friends and family. Ownership in the house itself and proceeds from its eventual sale are both considered lawful.

A number of Islamic banks now offer refinancing options that convert one’s conventional mortgage into its Shariah-compliant equivalent. Get in touch with Halal Options to learn more.

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RUNNING A HOME BUSINESS FROM A HOUSE WITH A HOME PURCHASE PLAN

Commercial activities within the property that do not affect the re-sale of the property as a residential property are now allowed with at least one provider. Previously, the finance companies only allowed office/study to be the only legitimate commercial use.

Now, other types of home-based businesses like hairdressing, beauty therapy, cupping, etc. would also be allowed. However, insurance must be available on current terms, allowing for business use.

Let us know when applying if you plan to run any home based business.

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"O you who have believed, fear Allah and give up what remains of interest, if you should be believers. And if you do not, then be informed of a war (against you) from Allah and His Messenger."

Some lessons from study of the verse published here: https://versebyversequranstudycircle.wordpress.com/2017/03/05/riba-constitutes-war-against-allah-and-the-messenger/

This ayah reminds us to leave Riba. Sometimes, we believe that since we are already in this transaction, we will give up when this loan ends.

Allah does not say: O You who is already in a Riba transaction, give up after five or ten years. We must pay heed to this warning because the next ayah is terrifying.

Can we visualize this happening on the Day of Judgment? Do we have the courage to take arms against Allah and the Messenger ﷺ? And yet, we believe that our situation is unique. We have to buy a house. We have to take a loan on Riba. Do we think that Allah doesn’t know our state? He knows our situation, He placed us in this situation.

This is a post from the Halal Options WhatsApp Channel. Follow the link to follow us.

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