Disclosure: Ziyad Finance receives no fee from any provider named in this article. Provider links go to their own websites. This is education, not advice.
Last updated: 12 September 2026. Halal rates checked 12 September 2026; conventional rates from Which? (1 September) and HomeOwners Alliance (6 September). All change weekly.
Quick answer: On a £300,000 home over 30 years, the cheapest halal mortgage costs £299 a month more than the cheapest conventional two year fix at a 10% deposit (£1,703 against £1,404) and £160 more at a 20% deposit (£1,390 against £1,230). The gap is 1.1% to 1.8% on the rate. It is smallest at 20% deposit and on Gatehouse's fee-free refinance range.
Everyone asks this before they ask anything else, and most answers are either vague or a sales pitch. Here is the working. You can rebuild every figure at your own price with the halal mortgage calculator. New to Home Purchase Plans? Start with our halal mortgage UK guide, which covers every provider and how the contracts work.
The numbers, side by side
Cheapest two year fixed rate on each side. £300,000 home, 30 year term, acquisition and rent basis for the halal figures.
| Deposit | Conventional | Halal (Gatehouse) | Gap a month | Gap over 2 years |
|---|---|---|---|---|
| 5% | 4.97% · £1,525 | 6.78% · £1,854 | £329 | £7,907 |
| 10% | 4.72% · £1,404 | 6.48% · £1,703 | £299 | £7,187 |
| 15% | 4.60% · £1,307 | 6.48% · £1,608 | £301 | £7,228 |
| 20% | 4.60% · £1,230 | 5.68% · £1,390 | £160 | £3,830 |
| 35% | 4.58% · £997 | 5.68% · £1,129 | £132 | £3,168 |
Conventional rates are the best available across the market as listed by Which? and HomeOwners Alliance in the first week of September 2026 (Leeds, West Brom, Danske, Bank of Ireland, Santander). Halal rates are Gatehouse Bank's published purchase rates; Offa is within 0.12% of Gatehouse in every band and StrideUp is 0.5% to 0.6% above.
Verdict: the gap is real, it is about 1.1% to 1.8% on the rate, and it is smallest with a 20% deposit. Five year fixes tell the same story: at 10% deposit, £1,699 halal against £1,408 conventional, £291 a month.
Where the gap comes from
Funding cost. A high street bank funds mortgages largely from current accounts that pay close to nothing. Islamic banks fund Home Purchase Plans from savings accounts that pay an expected profit rate of around 4% to 4.8%. That cost has to be passed on.
Scale. Four providers share a market the big lenders would call a rounding error. Underwriting, legal structures and Shariah governance are fixed costs spread over a small book.
The structure. Each plan involves two contracts (a purchase and a lease), two sets of legal work, and property that sits on the provider's balance sheet. It costs more to run than a loan.
None of that is changing this year. What has changed is competition. Since Offa launched in February 2026, Gatehouse has cut rates and launched a fee-free refinance range, and the 80% band is now within 1.1% of the mainstream.
What the extra money buys
This is the part most comparison pieces skip, and it matters, because you are choosing to pay it.
A conventional mortgage is a loan. You owe the money plus interest, and the house is security for the debt. A Home Purchase Plan is a purchase and a lease. The provider owns a share of the bricks; you rent that share and buy it back. No money is lent, and the rent is a charge for using a real asset, not for using money. Each provider has a Shariah board that audits the contracts and the operations.
Whether that difference is worth £160 to £300 a month is a question about what you believe, not what you can afford, and we are not going to answer it for you. What we can say is that the difference is in the contract, not just the name, which is why regulated plans have their own FCA rulebook and their own stamp duty rules. Is a halal mortgage actually halal? goes through the contracts and the scholarly view, including the minority who are not satisfied.
The two things that shrink the gap
1. Get to a 20% deposit. At 10% the gap is £299. At 20% it is £160. The conventional rate barely moves between those two (4.72% to 4.60%); the halal rate drops from 6.48% to 5.68%. The deposit guide shows why the last £15,000 before 20% is worth twice as much as the £15,000 before it.
2. Refinance into the fee-free range. Gatehouse launched a fee-free refinance range on 4 September 2026: 5.68% for two years, 5.63% to 5.76% for five, up to 80% FTV, no product or application fee, one free valuation. For someone switching a conventional mortgage to a halal one, the £648 to £1,148 of fees on the purchase products disappears.
Smaller levers: a home with an EPC of A or B gets 0.10% off at Gatehouse, and overpaying the 10% a year the providers allow brings the next re-fix into a cheaper band sooner.
What the gap costs over a whole plan
People sometimes multiply the monthly gap by 360 and get a frightening number. Do not. Nobody stays on one product for 30 years. The realistic comparison is the fixed period, then a re-fix every two to five years at whatever the market offers. Over a two year fix at a 10% deposit the gap is £7,187. At a 20% deposit it is £3,830. Those are the numbers to weigh, and they fall every time you move into a lower band.
Related reading: Is a mortgage haram? covers what scholars say about conventional mortgages, and Islamic banks in the UK lists every Shariah-compliant bank and home finance provider.
Frequently asked questions
Are the fees higher too? Broadly no. Gatehouse and Offa charge £648 to £1,148 all in; StrideUp £1,249. The conventional products in the table charge £899 to £1,724. Valuation, legal and survey costs are the same on both sides.
Do halal mortgages have early repayment charges? Yes, during the fixed period, in the same range as conventional lenders. Outside the fix you can settle freely.
Is the follow-on rate worse? Gatehouse reverts to 7.25% and StrideUp to 7.99%. Conventional standard variable rates also sit well above the fixed rates. In both cases you should re-fix before reverting.
Can I switch from a conventional mortgage to a halal one? Yes, that is what the refinance products are for. The provider settles your existing mortgage on completion. Whether you should is a question for a regulated adviser, because the early repayment charge on your current deal can outweigh the saving.
Is it haram to keep my conventional mortgage until the fix ends? That is a question for your scholar, not for us. Many people time the switch to the end of their current fix to avoid the early repayment charge; the maths of that is in the calculator, the ruling is not.
What we recommend
Put your own price and deposit into the halal mortgage calculator and look at two rows: the deposit you have, and 20%. The difference between those two rows is the number that should decide whether you buy now or save for a few more months.
If you are switching from a conventional mortgage, find your early repayment charge first, then compare it with the two year gap in the table above.
For an hour on your own situation, book a Home Buying Plan call. Education, not advice, and 10% of the fee goes to the National Waqf Fund.
Ziyad Finance provides educational guidance only and is not a mortgage adviser. We do not arrange home finance and receive no fee from any provider named here. Conventional rates from Which? (1 September 2026) and HomeOwners Alliance (6 September 2026); halal rates from Gatehouse Bank's product guide effective 4 September 2026, checked 12 September 2026. All rates change frequently; confirm with the provider before applying. Your home may be repossessed if you do not keep up payments on your mortgage or Home Purchase Plan. Read our full disclaimer.
