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Buy your dream home with comparable costs to other banks

Shariah-compliant home financing options for purchasing and refinancing through our Ijarah (Lease to Buy) home finance – coming soon.

Buy your dream home with comparable costs to other banks

Shariah-compliant home financing options for purchasing and refinancing through our Ijarah (Lease to Buy) home finance – coming soon.

Buy your dream home with comparable costs to other banks

Shariah-compliant home financing options for purchasing and refinancing through our Ijarah (Lease to Buy) home finance – coming soon.

We're not open for business yet. We're a "Restricted ADI" which allows us to build our systems and test our products before 5 July 2024. We then plan to obtain APRA approval to launch publicly.

How does Shariah compliant home finance actually work?

We buy your choice of home and lease it to you.
You pay rent and buy our share progressively
(lease to own) - it's called Ijarah.

You find your dream home and agree a price

Once you’ve found the home you want to buy, you come and tell us the amount you’re buying the home for.

From the Shariah finance perspective, we appoint you as the bank’s agent to buy the property

After we do our due diligence on your capacity to repay as well as valuation of the property etc, we appoint you as the bank's agent to buy the property. You agree to pay rent on the property and buy our share progressively.

You pay regular instalments over the finance term until you fully own the property

Your regular instalments contain a rental amount plus payment towards buying the bank’s ownership in the property. Your rental payment goes down (unless rental rates go up) as you progressively own more and more of the property. The amount of your instalments will be similar (competitive) to what you would be charged as interest at competitor banks.

We agree that you are 100% on land title, and only you benefit from any house price movements

As the bank's agent, the home is purchased in your name only on the title with the bank taking a mortgage. We agree as part of our contract that all movements of the house price are borne by you (not the bank).

At the end, we transfer the property to you

Once you fully pay out the bank's share in the property, the bank releases the mortgage on the property. Congratulations!

SOME IMPORTANT POINTS TO UNDERSTAND

Stamp duty across Australia makes traditional Islamic transaction structures tricky. This is because in most Islamic finance structures, the bank buys the house/asset first and then sells it to you. This would create double stamp duty in most states and territories. To get around this, we allow you to go on the property's title from day one, so you buy it directly from the seller. We take a mortgage over the property. This is the legally binding structure. However, we also get you to sign a non-legally binding "ethical" agreement with all the Shariah-compliant principles, such as the fact that the bank "owns" our share of the property until you buy it off us.

Rent is only charged on the proportion of the property that you do not own

You’re 100% on title of the property, with the bank taking a mortgage over it. You hold the bank’s shares of the property as custodian of Islamic Bank Australia

If you wanted to move to another bank, you can use the funds from the other bank to buy all the remaining shares (much like paying out a loan)

Rental rates can be fixed or variable and are often set in a similar way to interest rates at other banks. This doesn't make them interest! They are rental charges for you living in or leasing the bank's share of the property.

How does Islamic banking actually work?

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Important regulatory notice

We hold a restricted ADI authorisation granted by the Australian Prudential Regulation Authority (APRA). This authorisation allows us to offer banking services, but is subject to certain restrictions such as a cap on the amount of deposits that we can hold in total. The purpose of the “restricted” status is that we can test our systems and processes before launching as a fully unrestricted bank.

We do not currently meet the full prudential framework and/or requirements, and you should consider this before depositing funds with us. After the completion of our “restricted” phase, we plan to obtain APRA’s approval so that we can publicly launch.

Acknowledgement of Country

We acknowledge the Aboriginal and Torres Strait Islander peoples as the first Australians and Traditional Custodians of the lands where we live, work and bank.  Our corporate head office is in Darug Country. We pay our respects to Elders past, present and emerging.   

Important regulatory notice

We hold a restricted ADI authorisation granted by the Australian Prudential Regulation Authority (APRA). This authorisation allows us to offer banking services, but is subject to certain restrictions such as a cap on the amount of deposits that we can hold in total. The purpose of the “restricted” status is that we can test our systems and processes before launching as a fully unrestricted bank.

We do not currently meet the full prudential framework and/or requirements, and you should consider this before depositing funds with us. After the completion of our “restricted” phase, we plan to obtain APRA’s approval so that we can publicly launch.

Acknowledgement of Country

We acknowledge the Aboriginal and Torres Strait Islander peoples as the first Australians and Traditional Custodians of the lands where we live, work and bank. Our corporate head office is in Darug Country.  We pay our respects to Elders past, present and emerging.   

Copyright © Islamic Bank Australia ABN 37 609 971 280, AFSL and ACL 534355. AFCA member 76324.

Information on this website does not take your personal circumstances, needs or objectives into account. Please consider its appropriateness for you.   We are not yet open for business.  We are a Restricted ADI and do not yet meet the full prudential framework, and you should consider this before banking with us once we are open for business.  Fees and charges may apply, as well as terms and conditions which you should review. Information on this website is subject to change. In order to open a credit product in future, you will need to meet our credit criteria and be approved.  Please review the product disclosure documentation provided at the time of opening your account for detailed information.