A halal mortgage?

We get this question a lot. In all honesty, a product that’s called ‘mortgage’ will not likely be halal or shariah-compliant. The word ‘mortgage’ is made up of two Latin words and translates directly to ‘death pledge’ – not that appealing, right? This is why we offer a mortgage alternative, Pfida’s Home Provision Scheme.

Partners, in it together.

The Pfida Home Provision Scheme is set up as a co-ownership agreement, making us partners. Since we’re in it together, we’ll work to make sure we protect each other.

How does it work?

How is it halal and
shariah-compliant?

Our products are fully shariah compliant and have been reviewed by Sheikh Haitham Al-Haddad and the Islamic Council of Europe. We believe in being ethical and acting with integrity in everything we do, with the ultimate goal of doing business to benefit everybody mutually.

Click here to view our certificates.

Here are some more reasons
our mortgage alternative remains
halal and ethical:

Debt-free

Since you are under no obligation to purchase our share of the property from us this means there is no debt. This also means no early or late repayment fees ever for not purchasing equity.

Not pegged to interest

The rent we charge does not relate to macroeconomic indicators such as interest rates. Instead, it is determined by a number of factors including the local rental market, with annual rent reviews capped to reduce uncertainty.

Affordability

Since we sell you the property at the original purchase price, and not at the current market value, and provide rental discounts (unlike other shared ownership schemes), we do our best to make sure it remains affordable for you.

True risk sharing

In case of a loss, or shortfall upon sale, proceeds are split according to respective partnership share. In comparison, traditionally, a bank has the first call on proceeds and the homebuyer may end up with nothing upon foreclosure.

Ultimate flexibility

We’ve tailored our tech to give you control over managing your Pfida home journey through your account dashboard. You can change your target equity payment when you need to or opt to pay rent only in any given month.

Your equity, your choice

Our product reduces the risk of foreclosure by introducing an equity buffer. This allows you to pay us in equity if you cannot afford your rent. You can then purchase it back again once you are able to, in your own time.

Riba vs. rent – what’s the difference?

Fair question, we get asked this one a lot too, along with ‘Is interest hidden by the rent?’

Consider these two situations:

Scenario 1

You approach a lender and borrow £5,000
You have agreed to pay this back within one year, you now owe debt
For each day this debt is outstanding, the lender charges you a percentage as their profit; this is interest

Scenario 2

You and your friend agree to purchase a car together for £2,000 each. Both of you are equal co-owners
Your friend does not use the car though, so offers it to you to use exclusively in exchange for rent on their portion
You are not contractually obliged to pay for your friend’s share, you are simply paying for the use of the portion of the car that you do not own. As there is no contract to pay it back, you do not have the burden of debt

So what’s the difference?

In the first scenario, you have entered a contract to pay the lender back within a set period of time, along with an extra charge as interest during the time this amount is outstanding.

In the second scenario, you are paying rent on an item that you own a portion of.

If you had a contractual obligation to purchase your friend’s share, this agreement would have been considered a debt, making your ‘rent’ equivalent to interest.

Our Home Provision Scheme works similarly to Scenario 2, there is no contractual obligation in place for you to pay us for our share of the property. You have ultimate flexibility and can choose to pay rent only in any given month, along with how much you want to pay towards purchasing your equity.

Our agreements do set a finance term in place. This is a preferred timeline set by you, in order to become the owner of the property. This finance term will suggest a target monthly amount that includes rent and equity which will help you reach your goal. Since you have complete flexibility over if and how you purchase more equity of the property, this is not a contractual obligation. Find out more about finance terms.

Phew, that was a lot of information! At the end of the day, our goal is to help you reach your goal of owning a home in a halal and shariah-compliant way.

What do the industry experts say?

A genuine Islamic partnership. I strongly believe that this will be a real contribution to Islamic Finance and help all of society.

Sheikh Haitham Al-Haddad

Islamic Council

At last! We’ve waited so long in the UK for a mortgage product that genuinely attempts to share risk and give the customer, whether Muslim or non-Muslim, a fair deal.

Ashley Freeman

CEO, Gateway LLP

Primary Finance is all about the efficient and effective mobilisation of funds for the benefit of the ordinary person in the real economy.

David Vicary

Managing Director, DVA Consulting

I’ve worked in the Islamic finance industry for a long time and I’ve rarely seen a product that addresses grassroots issues in the way Primary Finance has managed.

Harris Irfan

Chairman, UK Islamic FinTech Panel

I’m delighted to give my support to the Primary Finance Home Purchase Plan. This carries all of the justice and risk sharing that an Islamic contract should have, in a way which I have not seen in any of the other products currently available.

Tarek El Diwani

Islamic Finance Expert

One of the great things about Primary Finance is that it’s community-based finance that is going to enable and uplift the community. I would say to all of you to get behind them in any way that you can.

Umer Suleman

Islamic Council of Europe

Join the waiting list for home finance.

By registering a Pfida account, we’ll automatically add you to the public waiting list for home finance. The current estimated waiting time for home finance is 5 years, with an initial equity contribution (deposit) from you. We recommend 20% to all our customers, but we do accept 15% as your initial equity contribution.

Your wait time is dependent on a number of factors, such as how much deposit you have, how much finance you need and your affordability. You can tell us this information by completing the finance requirements form after registering your account.

Join the waiting list