Offa has unveiled what it describes as a high street bank-beating Home Purchase Plan, the Islamic equivalent of a residential mortgage, with offers available within an hour depending on credit rating and risk criteria.

The firm said its modern, paperless application process allows it to compress timescales that typically stretch into weeks. Citing estimates from the Home Owners Alliance, Offa noted that conventional mortgage applications can take between two and four weeks to process.

The new product is the first newly regulated Home Purchase Plan to launch in more than seven years and follows authorisation from the Financial Conduct Authority last year, allowing Offa to offer regulated HPPs to UK customers.

FAMILY ASSIST AND GIFTED EQUITY

Central to the launch is what Offa describes as the first Sharia-compliant Family Assist feature, enabling customers to add family members to their finance plan to support affordability, while remaining the sole legal owner of the property.

The HPP also accommodates “gifted equity” transactions, allowing applicants to purchase property from family members at below market value, with Offa assessing finance on the full market value. The structure can remove the need for a cash deposit in such circumstances.

For standard purchases, the plan requires a minimum 5% deposit and will consider lending of up to seven times income, subject to affordability and underwriting criteria. Family members may also assist with payments.

DIGITAL PROCESS

Offa said it has been able to accelerate decision-making through a digital know your customer process, automated checks of income and expenditure, and the use of an Automated Valuation Model.

The firm operates under Islamic finance principles, where charging or paying interest is prohibited. Instead, the Home Purchase Plan is structured around co-ownership-with-leasing. Customers and Offa jointly acquire the property, with the customer making monthly payments to increase their share over time until full ownership is achieved.

Sagheer Malik (pictured), chief commercial officer and managing director of home finance at Offa, said: “We are revolutionising the cumbersome world of Islamic finance – challenging and beating conventional high street banks on speed while also allowing family members to help with payments.

“For too long, Muslims seeking property finance that adheres to their faith have had to suffer slow finance decisions and mountains of paperwork. All that has changed today, because we are providing a truly modern Sharia-compliant product with a paperless application process and ultra-quick decisions.

“It will also appeal to non-Muslims who favour ethical finance.”

Offa’s broader ethical finance model excludes investment in sectors such as the arms trade, animal testing, gambling, alcohol and tobacco.

The lender was previously the first to launch Sharia-compliant bridging finance in the UK and has since introduced a bridge-to-let service combining its bridging proposition with a paperless buy-to-let product. It also recently acquired Bank of Ireland’s Alburaq Sharia-compliant home finance portfolio.