Frequently asked questions for finance
Answers to your questions
We tried our best to answer all the questions you can think of, however, if we missed anything, please contact us.
Frequently asked questions.
We can provide a loan to customers who have a minimum 25% deposit in the case of residential or investment property finance. In the case of refinancing, the applicant must have 30% equity in the property. In the case of financing vacant land, we assess applications on a case-by-case basis and are able to finance up to 50%. In each of these cases, the remaining deposit can be provided by way of a cash deposit or equity in another property.
Our finance product has been established in collaboration with local, International Sharia Boards and Advisers. We adopt the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) Sharia standards. We are endorsed by an International Sharia board (Global Islamic Financial Services firm – GIFS headed by Mufti Ismail Ebrahim Desai) out of South Africa. GIFS continually audit us to ensure that the highest levels of Sharia compliance are being applied.
No. To be eligible to apply for a loan, the applicant must be an existing Hejaz client. This can be done by joining our Islamic Superannuation services, making a cash investment with us, or having accounting services with Hejaz.
Yes, we do. We look at these on a case-by-case basis.
Fixed repayments: With Hejaz, our Sharia Advisers have strictly advised us against having variable repayments as this is a unilateral change by the lender and causes uncertainty (Gharar) in repayment. We therefore only offer fixed rate repayments. Our rates are fixed for 12-months, with a rolling fixed rate period thereafter (12-months rolling). We could not fix the rate for a longer block as the rates increased dramatically (7%+).
The reason for not fixing the rates for the full duration of the loan (25+ years) is that it would incur a risk premium which would significantly increase rates, also, it would not allow for any extra repayments. Under our structure, repayments are fixed for 12-months and then there is a 4-week window in which a client can put upto $10,000 in extra repayments into their loan without incurring any extra fees and costs. This extra repayment comes off the Principal amount owing. The process is then repeated at the end of the following year and so on.
If you are an existing Hejaz customer, applying for a loan is easy. You simply complete an application form, provide supporting documents and submit this to us. We will then conduct a serviceability test to determine whether you can borrow the amount that you have applied for. Thereafter, you will be provided a conditional pre-approval.
Yes. You have access to an online portal wherein you can view your repayment history, current loan status, amounts payable and your profile.
Under our structure, repayments are fixed for 12-months and then there is a 4-week window in which a client can put upto $10,000 in extra repayments into their loan without incurring any extra fees and costs. This extra repayment comes off the Principal amount owing. The process is then repeated at the end of the following year and so on.
It is important to remember that we are based on Sharia. Therefore, charge rental and not interest on their home finance products.
As an Australian provider of Credit and Financial Services, Hejaz Finance is regulated by the Australian Securities and Investments Commission (ASIC). Hejaz Finance is required to display its charges in this way so that consumers can judge the value of what it offers and charges. Customers must be able to compare Hejaz Finance’s rate and charges against what they would receive or be charged by conventional financial institutions.
By expressing the rental rate as a % the charge is not converted into interest. It simply expresses how much rental Hejaz Finance is charging the customer as a percentage of the property purchase price. It also allows the customer to compare this charge with other providers in the market, including conventional mortgage companies, and to make a decision on which product is most suitable for them. Whilst our Home Finance Product’s are Sharia compliant and the conventional mortgage is not, the % rate is a common measuring tool that makes the two products comparable.
Displaying % rates for products benefits the customer and their ability to make a choice about the products they wish to take.
The product is structed using the Islamic Finance model known as Ijaara Muntahiya Bi Tamleek (Shared Equity Rental). Using this structure enables us to allow the title to the property to be held in the client’s name with the client making fixed monthly repayments. Each repayment comprises two components, a rental portion for residing in our share of the property and an equity buy back to acquire our share of equity in the property. As you acquire more equity in the property, the rental component decreases and the equity component increases until the property is purchases outright or you sell/refinance.
With Hejaz, you can sell the property when you wish. Your only obligation will be to pay us whatever is left owing at that date. We do not take a share of any profits that are gained on the property sale.
By following Islamic finance principles laid down in Sharia, Islamic law. To ensure the rules are followed as closely as possible, Hejaz Finance has an Internal Sharia Compliance Officer (ISCO) and a separate independent body called the Global Islamic Financial Services Council (GIFS).
GIFS is comprised of Islamic scholars and experts in the interpretation of Islamic law and its application within modern day Islamic financial institutions. The ISCO is also trained to the highest standards, set down by The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). It is recognised as the highest Sharia compliance standard in the Islamic finance industry. The combined works of the GIFS and the ISCO ensure that both the Hejaz Finance’s products and its activities comply with Islamic rules at all times.
We have worked closely with local and international scholars and Muftis who are experts in Islamic Finance. They have structured our product, drafted our contracts and continually audit us to ensure that Sharia standards are followed. We welcome your preferred scholar to speak to us about our product and will provide the details that they seek. Our doors are open to all scholars who wish to better understand who we are and what we offer.
A late payment fee will be charged. Our Sharia Advisers mandate that we take from the fee such an amount that covers the costs of processing the late payment. Any amount in excess thereof is paid to charity.
If the delay reaches 4 weeks, our mortgage servicing department (from the license holder) will contact you directly and the matter will be escalated out of our hands.
We calculate the rental rate on the basis of a formula which considers variables such as CPI and rental yields within a particular region.
We consider the region where the property is being purchased i.e. is it Metropolitan, Regional, Rural etc. Rural properties carry a higher rate as they are more difficult to sell in the event of default. Nature of property is also considered, e.g. Large parcels of land (hectares) which will also be a higher rate for the same reason as a rural property.
All rates and charges are disclosed upfront as we pride ourselves on transparency and like to ensure that our clients make informed decisions.