How it works
Learn the difference between Islamic and conventional.
Trade (Ijarah Model)
الَّذِينَ يَأْكُلُونَ الرِّبَا لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ الَّذِي يَتَخَبَّطُهُ الشَّيْطَانُ مِنَ الْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوا إِنَّمَا الْبَيْعُ مِثْلُ الرِّبَا ۗ وَأَحَلَّ اللَّهُ الْبَيْعَ وَحَرَّمَ الرِّبَا ۚ فَمَن جَاءَهُ مَوْعِظَةٌ مِّن رَّبِّهِ فَانتَهَىٰ فَلَهُ مَا سَلَفَ وَأَمْرُهُ إِلَى اللَّهِ ۖ وَمَنْ عَادَ فَأُولَٰئِكَ أَصْحَابُ النَّارِ ۖ هُمْ فِيهَا خَالِدُونَ – 2:275
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, “Trade is [just] like interest.” But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . But whoever returns to [dealing in interest or usury] – those are the companions of the Fire; they will abide eternally therein.
Surah Al-Baqarah [2:275]
The Hejaz difference
Our product is structured using the Islamic Finance model known as Ijarah (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 periodic repayments. Each repayment comprises two components, a rental (Ijarah) charge for residing in our share of the property and a principal payment 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 purchased outright or you sell/refinance.
Hejaz Islamic Finance
The home buyer and Hejaz Finance agree to be co-owners in the property.
The two parties buy the home and the ownership of the property is determined by each party’s down payment.
The home buyer makes monthly payments to Hejaz Finance. Part of the payment is a periodic charge for full use of the home and the rest is a payment to increase the buyer’s ownership of the property.
Over the course of the arrangement, the home buyer purchases all of Hejaz Finance’s ownership stake and becomes the sole owner of the property.
The home buyer arranges a loan from a bank or mortgage company according to a fixed or variable interest rate, based on the RBA interest rates.
The home buyer purchases the home.
The home buyer makes monthly payments to repay principal and interest on the loan.
Over the course of the loan, the home buyer repays the debt in full.
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