Last updated 14 November 2026 · Reviewed by Riyadh Financial Services Compliance
At a glance
- With our Ijaar home finance, you're the registered owner on the title from settlement.
- The financier holds a registered mortgage and a beneficial interest (an ownership share), which passes to you when all payments are made.
- You pay rental at a rental rate, with Principal and Rental or Rental Only payments.
- For how Ijarah compares with a sale-based structure, see Ijarah vs Murabaha.
What does Ijarah mean?
Ijarah means lease or hire. In Islamic finance, it's a contract where one party gives another the use of an asset for an agreed period in return for rental. The return comes from the use of a real asset, not from lending money for money, which is why Ijarah is used to avoid riba.
Our home finance is called Ijaar, from the Arabic word for lease.
What is Ijarah Muntahia Bittamleek?
Ijarah Muntahia Bittamleek is a lease that ends in ownership. Over the term, you pay rental for the use of the financier's share of the property and, with Principal and Rental, you also make payments that reduce the amount financed. When all payments are made, the financier's ownership share passes to you.
People often search for this as an "Islamic home loan" or "halal mortgage". With us, it's Ijaar home finance: a lease that ends in ownership, with no interest.
How does Ijarah Muntahia Bittamleek work when you buy a home in Australia?
- Talk to a broker about your plans. If you don't have a broker, contact us and we can refer you to an accredited broker.
- Your broker assesses your income and financial situation and lodges your application with the financier. Every application is assessed against credit criteria.
- The financier appoints you as its agent (wakeel, under a Wakalah agency agreement) to buy the property on its behalf.
- At settlement, you're the registered owner on the title. The financier holds a registered mortgage and a beneficial interest (an ownership share).
- You pay rental for the use of the financier's share, plus payments that reduce the amount financed if you choose Principal and Rental.
- When all payments are made, the financier's ownership share passes to you and the mortgage is discharged.
Under Australian law, the legally binding documents are a credit contract and a registered mortgage. The Shariah documents sit alongside them.
Who owns the home during the term?
You do, on the title. With our Ijaar home finance, you're the registered owner from settlement, and the financier holds a registered mortgage and a beneficial interest (an ownership share) until all payments are made. You must keep the property insured with conventional building insurance.
How is the rental worked out?
- Principal and Rental: you pay rental plus amounts that reduce what you've financed, so the financier's share gets smaller over time.
- Rental Only: you pay rental without reducing the amount financed. It's available for a limited period.
- Variable or fixed: the rental rate can be variable, or fixed for a period on selected Ijaar home finance.
The financier funds the property in the Australian market, so rental rates are set with reference to market funding costs. Many scholars accept a market rate as a benchmark for rent, because the return still comes from rent on a real asset. We don't publish rates on this website. An accredited broker can give you current rental rates.
What happens at the end of the term?
When you've made all your payments, the financier's ownership share passes to you and the registered mortgage is discharged. The home is then fully yours.
How is Ijarah different from a conventional home loan?
| Question | A conventional home loan | Ijaar home finance (Ijarah) |
|---|---|---|
| What you pay for | Interest on money lent | Rental, at a rental rate, for the use of the financier's share of a real property |
| Payment options | Repayments of the amount borrowed, plus interest | Principal and Rental, or Rental Only for a limited period |
| Who's on the title | You | You, from settlement |
| What the provider holds | A registered mortgage | A registered mortgage and a beneficial interest (an ownership share) |
| How it's regulated | As credit | As credit, whatever the Shariah structure |
What are the pros and cons of Ijarah home finance?
Possible pros
- The financier's return is rental on a real asset, not riba.
- You're the registered owner from settlement.
- 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.
- A variable rental rate can change, and fees and charges apply, so compare the total cost, not just the rate.
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 for buying a home to live in or an investment property.
- Refinancing existing finance to Ijaar home finance.
- On selected Ijaar home finance, a fixed rental rate for a period.
Our product structures are reviewed by our independent Shariah adviser. Ask us for the current Shariah certificate and what it covers. We explain how our structures work, but we don't give religious rulings, and you're always welcome to seek your own scholar's view.
Keep reading:Ijarah vs Murabaha · How Islamic home finance works · Ijaar home finance