Hejaz brings Islamic mortgage to market
Sharia-compliant financial company Hejaz Financial Services has spent the past year trialling an Islamic mortgage product – the first in the local market – and is close to finalising plans to offer the loan through a mortgage broker.
Hejaz is a diversified group, offering superannuation, investment funds, financial and estate planning and, more recently, mortgages.
The company was started in 2013 and its compliance with sharia law is certified by Global Islamic Financial Services, a South African-based sharia audit, advisory, tax and accounting firm.
Hejaz has been getting around 150 applications for home loans a month from existing clients since it rolled out the product in the middle of last year.
Hejaz chief operating officer Muzzammil Dhedhy said the growth potential is enormous once the product gets onto broker panels (the group Hejaz is working with has not been disclosed).
He said there are around 1.2 million Muslims living in Australia and only an estimated 30,000 to 40,000 use the services of the handful of Islamic financial services providers here.
“Access has been the problem,” he said.
Dhedhy said Hejaz has an Australian Financial Services Licence and all its products are compliant with APRA and ASIC rules. “Sharia is complementary,” he said.
Sharia loans have a different style of contract. It is a facility where equity in the property is shared and the customer buys the financier’s share over time, paying rent along the way.
“The paperwork is different but the loan aligns with standard Australian credit practice,” Dhedhy said.
All products have to be certified sharia. In the case of loans this means they have to be funded from sources that are also sharia-compliant. Funding for the Hejaz loan comes from one of its own investment products.
According to Global Islamic Financial Services’ Guide to Islamic Finance: “Islamic economic activity is regulated by divine injunctions prohibiting interest, speculative behaviour, obscurity, market monopolisation, gambling and trading in unlawful or prohibited commodities and services.”