Broker guide
Islamic Mortgage Lenders: Sharia-Compliant Home Finance
Client needs Sharia-compliant home finance? Compare Islamic mortgage lenders, their structures and evidence rules, and understand NAB’s business-only offering.
- Published
- Updated
Islamic mortgage lenders provide halal mortgages: Sharia-compliant home finance that replaces interest with rent or profit under the provider’s contract. Australian home buyers can consider MCCA, Hejaz, Amanah and Islamic Co-operative Finance Australia Limited (ICFAL). National Australia Bank (NAB) publishes Islamic business finance, which is a different offering from a retail home loan.
How Islamic Home Finance Works
Islamic home finance funds a property through a lease or ownership arrangement, with payments for using the property and acquiring the financier’s interest. An interest-free halal mortgage still has a financing cost. The contract determines that cost and what the client owns as payments progress.
Lease-to-Own: Ijara
Ijara, also written Ijarah, is a lease arrangement that leads to ownership. The client makes rental payments under the finance agreement. Separate undertakings explain how the financier’s interest transfers at the end or on early payout.
Amanah’s structure, checked on 3 October 2026, keeps legal title with the customer and gives the financier a beneficial interest secured by a mortgage. Its payments include the amount used to purchase the property and the financier’s profit. The legal title and the contractual ownership interest therefore need separate explanations.
Shared Ownership: Diminishing Musharaka
Diminishing musharaka is a partnership in which the client gradually buys the financier’s share. Rent is charged for the portion the financier still owns. The contract also sets how purchased shares are priced.
ICFAL’s explanation, checked on 3 October 2026, separates rent, share purchases and profit on those purchases. Property and rental valuations affect the agreed schedule. Buying more shares reduces the portion on which rent is charged.
Assess the Client’s Requirements
A halal mortgage remains a finance contract with payment obligations, security and consequences for default. For regulated consumer credit, assess the client’s requirements and objectives and verify their financial position. The Australian Securities and Investments Commission (ASIC) explains these obligations in its responsible lending guide.
Record the client’s requirement for Sharia-compliant finance alongside affordability and their intended use of the property. Explain the provider’s documented structure and certification. The client can take religious questions about that structure to their chosen adviser.
Providers Offering Sharia-Compliant Home Finance
MCCA, Hejaz, Amanah and ICFAL have Australian home-finance offerings, but their contracts and submission routes differ. These are provider options, with no product ranking.
| Provider and check date | Structure and property purpose | Application route |
|---|---|---|
| MCCA, 3 October 2026 | Ijarah lease-to-own. Residential purchase, investment, refinance, construction and vacant-land products | Direct application. Its published Prime target market determination permits eligible Pepper Money-accredited brokers and licensed intermediaries |
| Hejaz, 3 October 2026 | Ijara home finance. Home purchase and refinancing, with a separate investment-property guide | Direct applications and the Hejaz broker partner program |
| Amanah, 3 October 2026 | Ijarah. Home purchase, investment, refinancing and separate construction or land finance | Its representatives and brokers. Published Prime distribution requires Pepper Money accreditation and an approved aggregator or introducer arrangement |
| ICFAL, 3 October 2026 | Diminishing musharaka. Home purchase, investment and refinance, with separate construction arrangements | Online enquiry to ICFAL’s finance team, followed by assessment and membership |
MCCA’s and Amanah’s construction offerings are separate from their published Prime products. The Prime documents exclude construction of a dwelling. An established residential-property approval cannot be treated as approval for a building project.
ICFAL’s published application route is a direct member process, including a waiting list for funds. A broker assisting a client uses that route with the client’s authority.
Does NAB Have an Islamic Home Loan?
NAB’s Islamic finance page, checked on 3 October 2026, describes business finance starting at $3 million. It covers commercial property and land, business acquisitions, equipment and livestock. NAB describes accredited bankers and also publishes material for commercial brokers.
That published offering is not a retail NAB Islamic home loan for buying a family home. A NAB Sharia-compliant business facility belongs in a business-finance assessment. For the client’s conventional residential borrowing, use the separate NAB lending policy guide.
NAB Islamic home loan reviews cannot establish that a retail product exists or supply its contract terms. The published product purpose decides whether NAB belongs in the client’s home-finance comparison.
Eligibility, Deposit and Evidence
Islamic home finance providers assess income and affordability as well as the client’s deposit. Serviceability is the assessment of whether income can cover the proposed payments after living expenses and existing commitments.
Provider Deposit and Evidence Rules
MCCA’s residential page, checked on 3 October 2026, advertises financing up to 90% of property value. That means at least a 10% contribution before costs under that advertised limit. MCCA has full-documentation and reduced-documentation routes, and its enquiry form asks self-employed applicants for the last two years’ net taxable income.
MCCA conducts a serviceability assessment and requires an acceptable valuation. Its funder can request further documents. A deposit meeting the advertised percentage does not settle either assessment.
Hejaz’s current home-finance page, checked on 3 October 2026, advertises a 5% deposit for Gold and 20% for Essential and Flexible. These percentages apply to those named products. The home-finance application collects employment and income information, assets, liabilities and living expenses for assessment.
Prepare payslips and bank statements for wages, or business financials and tax evidence for self-employed income. Match the documents to the chosen Hejaz product’s application requirements. A smaller deposit does not remove the need to prove repayment capacity.
Amanah’s home-finance page, checked on 3 October 2026, advertises deposits as low as 5%. Its Prime wage-income checklist includes payslips, employment evidence and bank statements. Prime self-employed applicants provide two years of returns, tax assessments and financial statements.
Amanah also has an alternative-documentation checklist using a financial declaration with business bank statements, business activity statements or an accountant’s letter. Its Prime product requires demonstrated capacity to repay over time. Alternative documents change the evidence route, while affordability still needs assessment.
ICFAL’s home-finance rules, checked on 3 October 2026, require a 20% deposit and regular, verifiable Australian taxable income. Applicants must be Australian citizens or permanent residents, aged at least 18. Self-employed applicants need two years in business and two years of business and personal tax returns with tax assessment evidence.
ICFAL assesses income, expenses and existing liabilities before approval. Its conditional-approval process includes holding at least 10% of the estimated property price as a member while funds become available. That holding requirement is separate from the 20% deposit required for home finance.
NAB’s published Islamic offering, checked on 3 October 2026, is business finance. Retail home deposit and income rules cannot be inferred from it.
Differences From a Conventional Loan
The financial evidence overlaps with conventional lending, but the payment model can change the affordability calculation. Include rent and share-purchase commitments where both apply. For shared ownership, projected property values can also affect future share-purchase costs.
Keep purchase costs outside the deposit calculation. The minimum home-loan deposit guide explains the conventional comparison. Match the property value and available cash across both options before comparing borrowing amounts.
A shared-ownership contract can involve acquisition, later ownership transfers and a final buyout. Include legal work, valuation and title-registration charges in the budget. Transfer duty depends on the jurisdiction and legal transactions, so obtain a conveyancer’s itemised duty assessment for the actual structure before signing.
The Board of Taxation’s Islamic finance discussion paper explains how multiple transactions can create tax differences. It is historical background, not a current state-by-state duty calculation. Do not assume either automatic double duty or an exemption.
Compare the Cost for the Client
Compare Islamic home finance with a conventional loan over the same period, including payments, fees and any amount still needed to own the property outright. A lower monthly payment can reflect a longer term or slower acquisition of ownership.
Fictional Client: Same Property and Finance Amount
Aisha is a fictional client buying an established home for $750,000 with a $150,000 deposit. Both illustrative options finance $600,000 over 30 years. Every payment and fee below is invented to demonstrate the calculation, with no live provider rate or product quote.
Assume 360 equal monthly payments, full payout at the end and no extra repayments. The Ijara schedule includes acquisition of the financier’s interest. The figures include all assumed finance fees, while common purchase duty, conveyancing and property running costs are excluded from both sides.
| Cost assumption | Illustrative Ijara option | Illustrative conventional loan |
|---|---|---|
| Monthly payment | $3,500 | $3,300 |
| Payments over 360 months | $1,260,000 | $1,188,000 |
| Total finance fees, including final discharge | $3,000 | $2,000 |
| Remaining payout after the final payment | $0 | $0 |
| Total payments and finance fees | $1,263,000 | $1,190,000 |
In this fictional comparison, the Ijara option costs $73,000 more over the term. Both totals include repayment of the original $600,000. Subtracting that amount leaves financing costs of $663,000 and $590,000 respectively.
The deposit is identical and excluded from both finance totals. All amounts are Australian dollars and include any applicable tax within the assumed fees. For an actual variable-payment contract, calculate revised payments when rent or interest changes instead of treating today’s payment as fixed for 30 years.
For diminishing musharaka, use the scheduled cost of buying all remaining shares plus rent and profit charges. Include any agreed repricing of shares and costs of ownership transfers. A monthly rental figure alone leaves out part of the cost.
Extra Payments, Refinancing and Sale
Under Ijara, early exit pays out the financier’s contractual interest. MCCA’s explanation, checked on 3 October 2026, allows an outright purchase during the agreement by paying the outstanding finance amount. Amanah’s explanation, checked on the same date, applies a purchase undertaking on early termination, including the outstanding balance and relevant discharge costs.
Hejaz’s home-finance page, checked on 3 October 2026, advertises unlimited additional repayments for its Gold, Essential and Flexible tiers. Amanah’s published variable-product features include extra instalments and redraw, checked on the same date. Apply the selected contract’s rules to the client’s intended payment pattern.
For diminishing musharaka, extra share purchases increase the client’s ownership and reduce the financier’s remaining rental share. ICFAL’s rules, checked on 3 October 2026, describe refinancing into a partnership and sharing the net profit or loss on sale. The share valuation and sale terms affect the buyout amount.
Refinancing away from either structure requires a payout figure and release of the existing security. For Ijara, settle the contractual purchase obligation. For shared ownership, settle the remaining shares under the agreed valuation method and complete the ownership documentation.
A conventional loan refinance repays the debt and discharges the mortgage. Extra repayments reduce its outstanding principal, subject to the product’s fixed-period and redraw rules. On sale, the lender receives its payout from settlement proceeds and the borrower retains the balance after sale costs.
Put the required cash at settlement and a planned early-exit payout beside the monthly payment in the client’s comparison. Record which contract meets the client’s Sharia requirement and whether its total cost and payment obligations fit their budget.
