Why some people pay more to avoid convential home loans
Some Australians, like Wildan Al Hazmi, choose Islamic financing for home loans to align with religious principles that prohibit interest, or riba, despite the option often being more expensive than conventional loans. Islamic financing operates through structures like Murabaha and Ijarah, which involve asset-based transactions and profit-sharing instead of interest-based lending. While not cheaper, these products appeal to those seeking ethical, halal-compliant financial solutions.
- ▪Wildan Al Hazmi chose Islamic financing for peace of mind and religious compliance, avoiding interest-based loans.
- ▪Islamic financing avoids riba (interest), gharar (speculation), and maisyir (gambling), and prohibits investment in industries like alcohol and gambling.
- ▪Common Islamic financing models include Murabaha, where a financier buys and resells an asset with a markup, and Ijarah, a shared ownership model.
- ▪Islamic financing profit rates are benchmarked to market interest rates, and while not regulated directly by the Reserve Bank of Australia, they are influenced by broader economic conditions.
- ▪Salaam, a Sydney-based provider, notes that the limited size of the Islamic finance market in Australia affects its affordability and competitiveness.
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| Original publisher | ABC News (Australia) |
| Canonical URL | https://www.abc.net.au/news/2026-05-17/islamic-financing-housing-and-interest-rates/106541806 |
| Publication time | Sat, 16 May 2026 19:23:23 +0000 |
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Why some people pay more for Islamic financing to avoid conventional home loansRBy Raihanah RasumTopic:BankingSun 17 May 2026 at 5:23amSun 17 May 2026 at 5:23amSun 17 May 2026 at 5:23amWildan Al Hazmi said he chose Islamic financing for "peace of mind". (Supplied)abc.net.au/news/islamic-financing-housing-and-interest-rates/106541806Link copiedShareShare articleWhen Wildan Al Hazmi decided to buy an investment property several years ago he did not even consider a conventional loan.Instead, he opted for a niche option that caters to a growing segment of Australia's population.Mr Al Hazmi, a father of two in Melbourne, said he took out Islamic financing because of his Muslim faith."The reason for using Islamic financing is the peace of mind that comes from complying with Islamic principles…
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