My in-laws are demanding we pay £3,000 more a year for a Sharia mortgage

Buying your first home is one of the most significant financial decisions you will ever make.

For most couples, the hard part is saving the deposit and finding the right property but for some Muslim families in the UK, the question of how to finance a home purchase can cut right to the heart of faith, identity and family loyalty.

Islamic law forbids the charging or paying of interest – a principle that shapes not just financial decisions but, for devout Muslims, the very meaning of home.

This week’s Money Problem comes from Yasmin, 29, and her husband Tariq, 30, first-time buyers in Birmingham who are caught between their own financial reality and the deeply held religious beliefs of Tariq’s parents.

They asked me, Metro consumer champion Sarah Davidson, for a verdict.

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We are finally ready to buy our first home. We have a £40,000 deposit saved and we want to buy a three-bedroom house near Tariq’s parents in Birmingham for £240,000.

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The problem is the mortgage. We are Muslim though we are not particularly strict – we don’t drink, but we don’t pray five times a day either.

Tariq’s parents, however, are very devout.

When we mentioned we were looking at mortgage rates, his mother was horrified and said we must use an Islamic, Sharia-compliant mortgage.

She even said she would not feel comfortable visiting or eating in our home if it was bought with “haram” (forbidden) money.

Tariq is now panicked and wants to do whatever they say to keep the peace. I am much more practical.

I’ve looked briefly online and it seems like Sharia mortgages are significantly more expensive and harder to get than standard ones.

We are already stretching ourselves to afford this house and I don’t think we should pay thousands of pounds more just to appease his parents’ religious views when we don’t share them to the same degree.

A Sharia-compliant home purchase plan (HPP) allows you to buy a home without paying interest (riba), which is forbidden in Islam.

Instead of lending you money to buy the house, the bank buys the property alongside you. You pay a deposit and the bank buys the rest.

The most common structure is Diminishing Musharaka (diminishing partnership).

Your monthly payment has two components: capital, which buys back the bank’s share of the property over time, and rent, which you pay for living in the portion the bank still owns.

As your ownership stake grows, the bank’s shrinks and the rent you pay decreases.

By the end of the term, you own the property outright – having never paid a penny of interest.

All UK Sharia-compliant providers are regulated by the Financial Conduct Authority in exactly the same way as conventional banks.

This is an incredibly difficult position to be in.

You are caught between a major financial decision that will shape your monthly budget for decades and a deeply emotional family dynamic that could fracture your relationship with your in-laws before you even unpack your boxes.

The tension here is not just about money. It is about faith, boundaries and respect.

But before you and Tariq can have a constructive conversation with his parents, you need hard facts.

Let’s look at the numbers, the theology and the practical reality of your choices.

You need a £200,000 mortgage on a £240,000 property – a 17% deposit, requiring an 83% loan-to-value (LTV) product.

You are right that Sharia-compliant home purchase plans (HPPs) generally cost more than conventional mortgages, though the gap has narrowed as the Islamic finance market in the UK has grown.

If you take a conventional mortgage, the current best-buy for an 85% LTV two-year fixed rate comes in at 4.5% from Yorkshire Building Society with a £995 fee.

Over a 25-year term, your monthly repayments would be approximately £1,112.

If you use a Sharia-compliant provider such as Gatehouse Bank, their equivalent product is a two-year fixed rental rate at up to 90% LTV at 6.48% with a £149 application fee and £999 product fee. Over a 25-year term, your monthly payments would be £1,348.

That is a difference of £236 a month, or £2,832 a year.

Over a two-year fixed period, choosing the Sharia option will cost you over £5,000 more in monthly payments alone.

For a young couple stretching to buy their first home, that is a substantial financial penalty. It is entirely reasonable for you to balk at paying it.

However, you must also understand why Tariq’s mother reacted so strongly.

In Islam, the charging or paying of interest (riba) is strictly forbidden (haram).

It is not considered a minor infraction – it is viewed as a major sin that exploits the vulnerable and creates unjust wealth.

For devout Muslims, wealth acquired through interest is tainted. This is why Tariq’s mother said she would feel uncomfortable eating in your home.

She genuinely believes the roof over your heads, and by extension the life lived beneath it, would be compromised by haram finance.

Sharia mortgage lender Gatehouse Bank carried out some research in 2024 which found that three quarters of Muslim consumers would be willing to accept a higher price point for Islamic finance products.

According to the government-backed MoneyHelper service, if you have doubts about the Islamic nature of a financial product, you should speak to your Imam or an independent Islamic scholar.

That guidance reflects how seriously the theological implications are taken by those who observe them.

You and Tariq need to sit down – just the two of you – and decide what your boundaries are.

Tariq cannot simply default to his parents’ wishes if it puts your household finances under serious strain, but you cannot dismiss their beliefs as an inconvenience either.

If you decide the £265 monthly premium is simply unaffordable, present this to his parents not as a rejection of their faith but as a financial reality.

You might say: “We respect your beliefs and we looked closely at Islamic finance, but it will cost us almost £3,000 more a year.

“We cannot afford that without risking our financial stability.”

Some families in this situation find a compromise where the parents, if they are financially able, agree to subsidise the difference in monthly payments so the couple can use the Sharia option.

If his parents are unwilling or unable to do that, it gently forces them to acknowledge the financial burden they are asking you to carry.

Ultimately, this is your home and your debt. But tread carefully – a £3,000 annual saving is a hollow victory if it costs you your family’s support.

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