Can you buy a home on one income with Islamic home finance?

At a glance

• Individuals aged 18 years and over can apply in their own name, and the title is in your name from settlement.
• The Shariah structure is the same whether one person applies or several.
• On selected Ijaar home finance, we can help eligible first home buyers with a First Home Owner Grant application, where available in your state or territory.
• New to Islamic home finance? Start with how Islamic home finance works.

Can you buy your first home on your own with halal finance?

Yes. Plenty of people buy on one income: people who are single, single parents, and people who simply want a home in their own name.

When people search for "halal finance", a "halal home loan" or a "halal mortgage", they usually mean property finance without interest. With Riyadh Financial Services, that's Ijaar home finance: a lease that ends in ownership, with no interest. The way it follows Shariah (also spelt Sharia) doesn't change because there's only one name on the application.

How does Ijaar home finance work when you're the only applicant?

1. The financier appoints you as its agent (wakeel, under a Wakalah agency agreement) to buy the property on its behalf.
2. From settlement, you're the registered owner on the title. The financier holds a registered mortgage and a beneficial interest (an ownership share).
3. You pay rental for the use of the financier's share. With Principal and Rental, your payments also reduce the amount financed. Rental Only is available for a limited period.
4. When all payments are made, the mortgage is discharged and the financier's ownership share passes to you, so you own the property outright.

Who can apply?

• People 18 years and over who are Australian or New Zealand citizens or Australian permanent residents.
• Some temporary visa holders living in Australia, and some Australian and New Zealand citizens and Australian visa holders living overseas, on selected Ijaar home finance.
• Employed or self-employed applicants. Your broker will confirm the documents you need.

We don't offer finance to non-residents. Every application is assessed against credit criteria, and your broker will assess your income and financial situation.

What costs should you budget for on one income?

With one income covering everything, know the full list before you start looking:

• your own contribution towards the price;
• purchasing costs, such as stamp duty (unless a concession applies), legal or conveyancing fees and government registration fees;
• building and pest inspections before you buy;
• fees for the finance, such as valuation, establishment and settlement fees, and a risk fee if it applies (on selected Ijaar home finance it's included within the amount financed, not added on top);
• conventional building insurance;
• ongoing costs of owning a home, such as council rates, strata levies, utilities and maintenance.

We don't publish rates on this website. An accredited broker can give you current rental rates and help you compare the total cost, including fees. A variable rental rate can change, so leave room in your budget.

How can a Cash Management Account help?

On selected Ijaar home finance, our Cash Management Account lets you hold surplus money to reduce the rental you pay. It isn't an interest offset account, and no interest is paid or charged. Your broker can explain how it works and whether it's available on the option that suits you.

What first home buyer help is there?

• First Home Owner Grant: on selected Ijaar home finance, we can help eligible first home buyers with their grant application, where available in your state or territory. Each state and territory sets the grant and who's eligible, it's usually for new homes, and eligibility isn't guaranteed.
• Stamp duty concessions: these are also set by each state and territory. Your solicitor, conveyancer or state revenue office can confirm whether you're eligible.
• Home Guarantee Scheme: our Ijaar home finance isn't part of it. Our first home buyers guide has more.

What are the pros and cons of buying on your own?

Possible pros

• The home is in your name from settlement, and the decisions are yours.
• A structure based on rental on a real asset, not riba.
• The same consumer protections as other regulated credit, including hardship help and free external complaints through AFCA.

Possible cons

• Approval isn't certain: every application is assessed against credit criteria.
• With one income, there's less of a cushion if your situation changes or a variable rental rate goes up.
• Fees and charges apply, so compare the total cost, not just the rate.

How do you buy a home on one income, step by step?

1. Talk to a broker about your plans and budget. If you don't have a broker, contact us and we can refer you to an accredited broker.
2. Get a sense of what you can finance before you start making offers.
3. Find your home, and have your solicitor or conveyancer check the contract.
4. Your broker lodges your application, and the financier arranges a valuation.
5. If approved, you sign your documents, and at settlement you're the registered owner.

How can Riyadh Financial Services help?

Riyadh Financial Services arranges Shariah-compliant property finance through accredited mortgage brokers. Accredited brokers must act in your best interests under Australian credit law (the best interests duty), and they work across Australia, in person or online.

• Ijaar home finance to buy a home to live in, on your own or with others.
• Help with a First Home Owner Grant application on selected Ijaar home finance, where available in your state or territory.

Our product structures are reviewed by our independent Shariah adviser, and you can ask us for a copy of our Shariah certificate. We don't give religious rulings, and you're always welcome to seek your own scholar's view.

Keep reading:Islamic home finance for first home buyers · Ijaar home finance · Is Islamic home finance more expensive?