Reviewing Your Home Purchase Plan in 2025: What You Need to Know Before Your Rental Term Ends

Is Your Fixed Rental Term Ending in 2025? It’s Time to Review Your Options

Over 1.8 million mortgages in the UK are due to end this year — including Islamic Home Purchase Plans (HPPs).

If you’re one of them, now is the time to act.

With fixed rental terms coming to an end, many clients will be automatically moved to their provider’s variable rental rate — which often means significantly higher monthly payments.

Unlike conventional mortgages, Islamic Home Purchase Plans:

• Cannot be ported to another property

• Do not offer traditional remortgage or refinancing

• Require a completely new HPP application if you want to move, borrow more, or switch providers

So whether you’re:

• Reaching the end of your fixed rental period

• Exploring options to reduce your monthly payments

• Planning to move to a new home

• Needing additional halal finance for home improvements or debt consolidation

You’ll need to apply for a new HPP — and it’s best to start early.

1. Fixed Rental Terms Are Ending

Many clients who secured a Home Purchase Plan between 2020 and 2022 benefited from low fixed monthly rent.

But in 2025, those rental terms are ending. And without action, you’ll move onto your provider’s variable rental rate — which can increase costs dramatically.

Here’s an example:

Property Share Value	Fixed Monthly Rent	Variable Monthly Rent	Monthly Difference
£200,000	£836	£1,347	+£511
£300,000	£1,254	£2,021	+£767

Figures are illustrative based on recent updates from UK Islamic finance providers.

2. Base Rate Reductions Could Help Lower Future Rental Costs

In May 2025, the Bank of England reduced the base rate to 4.25% — the first cut in over a year.

While Islamic finance is not interest-based, many Sharia-compliant providers benchmark their rental rates against the Bank of England base rate. So this recent cut may result in more competitive fixed rental terms in the coming months.

This creates an opportunity to:

• Apply for a new HPP with more favourable terms

• Switch to a provider offering lower fixed monthly rent

• Avoid being locked into higher variable rental payments

What Are Your Options When Your HPP Term Ends?

✅ Refinance with a New HPP (Same or Different Provider)

This is the Islamic finance version of remortgaging. You apply for a new Home Purchase Plan to replace your current one, with updated terms and a new fixed rental rate.

This process includes:

• New affordability and credit assessments

• A fresh valuation of your property

• Full due diligence by your provider

Why refinance?

• Secure a new fixed rental term to avoid variable rate increases

• Potentially reduce your monthly rent

• Stay aligned with your long-term financial goals

You can choose to refinance with your current provider or switch to a different Sharia-compliant finance institution if they offer more favourable terms.

A broker who specialises in Islamic home finance can help you compare all available options without compromising your values.

✅ Apply for a New HPP to Raise Additional Funds

Need to fund a halal home improvement project?

You can’t “top up” your current HPP — but you can apply for a new Home Purchase Plan that includes additional finance.

This allows you to:

• Access equity to fund extensions, renovations or approved purposes

• Restructure your agreement in line with your needs

Most Sharia-compliant providers will allow you to borrow up to 95% of your home’s value, subject to affordability and eligibility checks.

Example: If your home is worth £300,000 and your current share is £180,000, you may be able to raise up to £105,000 in additional halal funding.

✅ Buying a New Home? You’ll Need a New Home Purchase Plan

Islamic Home Purchase Plans are not portable.

If you’re planning to sell your current home and move to another, you’ll need to:

1. Settle your existing HPP when the property is sold

2. Apply for a brand new HPP on the new property

3. Go through full affordability checks and legal due diligence again

The process is manageable — but it’s important to plan ahead, especially if you're timing the sale and purchase together.

Your broker will guide you through everything from sale strategy to your new application, ensuring both transactions meet Islamic finance standards.

Common Triggers for Reviewing or Replacing an HPP

• Your fixed rental term is ending in the next 6 months

• You’ve received a notice that your rent is going up

• You need to raise additional halal funds

• You’re planning to move home in the next 12 months

• You want to switch to a provider with better service or rental terms

What to Watch Out for in 2025

⚠️ Early Settlement Charges

Some providers apply early settlement charges if you end your plan before the agreed term finishes — even if you’re refinancing.

Typical charges:

• Between 1% and 5% of the outstanding finance

• Often tiered by year (e.g. 5% in year 1, 1% in year 5) depending on the length of your fixed rental period.

Your broker will help you calculate whether switching now, or waiting, is more financially sound.

⚠️ Affordability & Eligibility Criteria

Finance Providers have tightened affordability rules in 2025. You’ll need to demonstrate:

• Stable income

• Acceptable debt levels

• Clear credit history

• Valid purpose for any additional funding

Being self-employed or recently changing jobs? A broker can help present your case clearly and professionally.

⚠️ Loan-to-Value (LTV) & Property Value

Your ability to refinance or raise funds depends on your equity.

If your property has decreased in value or your LTV has increased, this may impact:

• The rental rate you're offered

• The maximum finance you qualify for

• Whether additional borrowing is possible

Before applying, you should get a realistic valuation of your home.

Why Work with a Specialist Islamic Finance Broker

Not all advisers understand the structure, legal requirements or ethical obligations of Islamic home finance. This is in addition that it requires an extra regulatory permission from The Financial Conduct Authority - a permission that only a very small number of UK firms Hold.

At Islamic Home Finance a trading style of The Introducing Broker Finance Hub, we specialise in:

✅ Sharia-compliant Home Purchase Plans

✅ Access to the UK’s leading halal providers

✅ Support for self-employed, families, and first-time buyers

✅ Honest, no-pressure guidance aligned with your values

✅ Hold the regulatory permission to advise on Home Purchase Plans

"Now isn’t the time for guesswork. Work with someone who shares your values and understands your goals."

Ready to Review Your HPP? Start Early. Act Smart. Stay Halal.

With rental terms ending, base rates shifting, and new opportunities emerging — 2025 is a crucial year to review your Home Purchase Plan.

Whether you're refinancing, moving, or looking to raise funds, we’ll help you do it in the most faith-conscious, financially sound way possible.

📞 Message us or visit islamichomefinance.co.uk to start your free HPP review today.

Islamic Home Finance is a trading style of The Introducing Broker Finance Hub Ltd.