The Essential Guide to Islamic Finance Australia

Post : May 26, 2023

Islamic finance Australia, also known as Halal finance, is a system of finance that adheres to Islamic law (Shariah), which prohibits charging or paying interest (riba) and engaging in speculative investments. 

Since Islamic finance adheres to Sharia principles and prohibits interest-based transactions it is not always easy to find Islamic institutions around the world. 

However, in Australia, Islamic finance is a growing market, with a number of banks and financial institutions offering Sharia-compliant products and services.

Islamic finance Australia

Several financial institutions in Australia offer Islamic financial products such as home loans, investment accounts, and superannuation funds. 

The industry is regulated by the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).

There are several Islamic financial products available in Australia, including home financing, car financing, and business financing. These products are designed to be Shariah-compliant, which means they must adhere to Islamic principles.

Some of the major players in Islamic finance in Australia include the Islamic Co-operative Finance Australia (ICFA), the Islamic Finance House, and the Australian Islamic Finance (AIF). Each of these institutions offers a range of products and services, including savings accounts, home financing, and business financing.

One important thing to note is that Islamic finance is regulated in Australia by the Australian Securities and Investments Commission (ASIC), which ensures that all financial products comply with Australian laws and regulations.

Islamic finance in Australia has been growing steadily over the years, with several banks and financial institutions offering Sharia-compliant financial products. Some of the major players in the industry include Westpac, National Australia Bank (NAB), ANZ, and HSBC. These banks offer a range of Islamic financial products such as home loans, car loans, personal loans, and investment accounts.

In addition to banks, there are also several specialist Islamic financial institutions in Australia, which offer a range of Sharia-compliant financial products and services.

The Australian government has also been supportive of the Islamic finance industry, with the introduction of legislation in 2008 to provide tax neutrality for Sharia-compliant financial products. The industry is regulated by ASIC and APRA, ensuring that consumers are protected and that Islamic financial products meet the same standards as conventional financial products.

Islamic finance and home loans 

Islamic finance home loans are based on the principles of Sharia law, which prohibits the charging or paying of interest. Instead, these loans are structured as partnerships between the lender and borrower, where the lender provides the funds to purchase the property and the borrower pays back the loan over an agreed-upon period.

To apply for an Islamic finance home loan, you will need to meet certain eligibility criteria, such as having a steady income and a good credit score. The application process is similar to that of traditional home loans, with the added requirement of complying with Sharia law.

There may be fees associated with Islamic finance home loans, such as application fees, valuation fees, and legal fees. These fees will vary depending on the lender and the specific loan structure.

There are different structures and options available for Islamic finance home loans, such as diminishing Musharaka and Ijara. 

Diminishing Musharaka involves the lender and borrower entering into a partnership to purchase the property, with the borrower gradually buying out the lender's share over time. Ijara involves the lender purchasing the property and leasing it to the borrower, with the option to purchase the property at the end of the lease term.

The basic principles of Islamic finance

It may be helpful to understand the basic principles of Islamic finance. Some of the key principles include risk-sharing, asset-backing, and social responsibility. Islamic finance encourages investment in real assets rather than purely financial products.


Islamic finance in Australia is a growing industry that provides an alternative to conventional finance for Muslims who wish to adhere to Sharia principles. With the support of the government and regulatory bodies, the industry is expected to continue to grow in the coming years.

Additionally, it is recommended to consult with a qualified Shariah advisor to ensure that the financial products comply with Islamic principles and values. Also to determine which option is best for your specific needs and circumstances.

It is also important to carefully review the terms and conditions of any financial product before signing any contracts or agreements.

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