Buying a Dutch Home Without Riba: What Is Possible

Where the market stands

Dutch banks, insurers and mortgage funds lend only on interest-bearing terms. Earlier initiatives to launch halal home finance, discussed with ministries and regulators from around 2008, did not lead to a product, mainly because of tax treatment and funding costs.

The current mortgage market is dominated by ING, Rabobank, ABN AMRO and insurers or pension-backed lenders. None offers ijara, murabaha or diminishing musharakah, and international Islamic banks do not lend on Dutch residential property.

Insifr and its first products

Insifr began accepting customers on 18 August 2025 as a digital provider for individuals and businesses operating on Islamic principles. It offers one personal riba-free payment package and one business account, with no interest paid on balances.

Media coverage in both the Netherlands and Flanders described it as the first Islamic bank in the country, but the label is commercial rather than legal. What customers actually receive is a payment account, not a licensed bank deposit or a financing facility.

How Insifr is set up

Insifr does not hold its own banking licence. It works with Mastercard, ClearBank and Transact Pay, and customer money is kept in segregated accounts. Deposits are therefore not covered by the Dutch deposit guarantee scheme, which matters for anyone keeping savings there.

Home finance plans

Insifr has said it intends to add Islamic investing and financing, possibly including mortgages and business finance. Until a product is launched and authorised, buyers should treat such plans as future intentions rather than an available option.

Any future Islamic mortgage would need either a banking licence from De Nederlandsche Bank or a partnership with a licensed lender, plus AFM supervision of advice and distribution. Checking those public registers before signing anything remains the simplest safeguard for consumers.

Why tax rules block Islamic mortgages

Dutch mortgage interest relief, the hypotheekrenteaftrek, applies only to interest on an eigenwoningschuld that is repaid at least on an annuity or linear basis within thirty years. Rent under ijara or the margin in murabaha is not clearly recognised as deductible interest.

Without relief, a halal product would cost a household significantly more after tax than an equivalent conventional mortgage. This disadvantage, rather than Sharia complexity, explains why Dutch lenders have not built Islamic home finance products.

Transfer tax and buyer costs

Owner-occupiers pay 2 percent transfer tax, overdrachtsbelasting, while buyers under 35 can benefit from a one-off starter exemption below a price ceiling that is indexed each year. Notary fees, valuation and land registry charges apply in every case.

Lending limits and NHG

Under the national credit rules, buyers can borrow up to 100 percent of the home’s value, with income limits based on Nibud tables updated yearly. The National Mortgage Guarantee, NHG, protects borrowers but only exists for conventional mortgages.

Halal alternatives people use

Many Muslim households save for years, combine family capital under a notarial co-ownership agreement or buy smaller homes with cash. Some invest in Sharia-screened ETFs to grow a deposit, while others rent social or private housing until savings allow a debt-free purchase.

Steps for a debt-free or family purchase

1. Decide with a trusted scholar which arrangements, such as family partnership, are acceptable for you.
2. Build savings in non-interest accounts or Sharia-screened investments, accepting market risk.
3. Agree written ownership shares with relatives and record them in a notarial deed.
4. Arrange a valuation and a structural survey before making an offer.
5. Sign the purchase agreement, which gives a three-day reflection period to private buyers.
6. Transfer funds via the notary and register the deed at the Kadaster.
7. Plan buy-outs of relatives’ shares over time, mirroring diminishing musharakah.

Costs for a purchase without a mortgage

Mistakes to avoid

• Assuming Insifr accounts are protected by the deposit guarantee scheme.
• Signing up for an advertised “Islamic mortgage” from a firm not supervised by the AFM or DNB.
• Accepting family money without a written agreement on ownership and repayment.
• Overlooking gift tax rules when parents fund part of the purchase.
• Ignoring box 3 wealth tax on savings and investments held for a deposit.

Lessons from neighbouring markets

KT Bank in Germany and UK Islamic banks show that Islamic home finance can work in Europe, but only after tax rules were adjusted or accepted structures emerged. Similar legislative changes would likely be needed in the Netherlands before banks commit.

Will an Islamic mortgage arrive in the Netherlands?

Possibly, if Insifr or another provider obtains the necessary licences and funding. The decisive factor will be whether the tax authorities accept Islamic payments as deductible, or whether households accept paying more for a Sharia-compliant structure.

Can a Dutch resident use a foreign Islamic bank?

Not for a Dutch home. Foreign Islamic banks rarely take Dutch property as security and are not authorised to offer mortgages to Dutch consumers. Some families finance a home abroad through Islamic banks in their country of origin instead.

Is huurkoop an option?

Dutch civil law recognises huurkoop, a hire-purchase of a house where ownership transfers after the final payment. It is rarely used, offers protections set out in the Civil Code, and its Sharia acceptability depends on how the instalments are structured.

Do Sharia-screened ETFs help with a deposit?

They can, for those accepting stock market risk. Funds such as the iShares MSCI World Islamic UCITS ETF are available through Dutch brokers, and their value counts in box 3. Short horizons make equity investing a risky way to save a deposit.