Islamic Bank Australia
The term Ijarah is derived from the Arabic language and means “lease”. In terms of financing a property, Ijarah refers to the process in which a financier and client enter into a contract together enabling the client to purchase a property, vehicle or commercial asset in compliance with Islamic Law.
Ijarah Finance operates under the principle of Rent-To-Own otherwise known as Ijarah Muntahiya Bil Tamleek – A Lease Agreement with the option to own the leased asset at the end of the lease period. In this lease or Ijarah agreement, the rights of both parties are protected via an agreed contract that they each party signs, otherwise known as a letter of offer or Ijarah contract. This contract conforms to the National Consumer Credit Protection Act 2009 (NCCP).
What are Islamic home loans?
Islamic bank Australia takes a different approach to earn from the loan they have given to finance your property which you are thinking to purchase. They don’t charge interest or any sort of that as earning from interest is not permissible in Islam. In Islamic bank home loan the property is bought by the loan provide from seller and then selling it again to the buyer.
There are many other types of Islamic home loan which are available. This is only one type of home loan provided by Islamic banks. Contact Ijarah Finance for more information on Islamic bank mortgage and other services.
What are different types of Islamic bank home loans?
There are 5 types of Islamic bank loan:
- Murabaha: In this the bank will buy the property and will sell it back at a profit to you, you just need to pay fixed monthly installments without any interest.
- Mudarabah: One partner lends to money to another so they can invest in a property and each partner shares a responsibility in the loan.
- Ijara: In the bank give you the house on lease and will transfer the ownership once payment is completed by you.
- Musharaka: You and the lender buy the property together and you gradually buy the bank out of its share. The more shares you own the less you have to pay the bank.
- Wakala: The bank becomes your agent, allowing them to use your money to invest in sharia compliant trading activities.
Ijarah Finance was established to help you purchase a property without entering into an interest-based mortgage. Our Islamic bank home loan can be tailored to suit individual needs.