There are several organisations, which claim to offer Islamic Shariah-Compliant finance in Australia. I am trying to gather information from all of them. I will update this post, Allah willing, with new information as I find it.
A. ICFAL:
In September 2022, I had a discussion with Ahmed Mosselhy from ICFAL (Islamic Co-operative Finance Australia Limited.) Their product is based on "Musharakah Mutanakesa" (Diminishing Partnership.) Here are the main points in very simple (and not necessarily financially accurate) terms. Please, feel free to contact them directly at https://www.icfal.com.au.
1. Their money comes ONLY from members, who choose to invest with them. They do NOT get money from banks or any other source.
2. Members can invest with them by depositing as little as $500. The money they get from their members makes up the capital, which ICFAL uses to finance buying homes.
3. Only members can get finance from them. If a member is interested in getting finance, he/she can apply. If enough capital is available, the finance will be approved. Otherwise, the member must wait until enough capital is available to fund his/her request.
4. If you want them to finance a home for you, you sign Musharakah (a share agreement) with them. They can own up to 80% of the home value at the purchase date. Obviously, you own the remaining value (starting from 20%.) When you purchase a home, you will be given a spreadsheet, which lists the expected appreciated value of the home over the finance term. So, it would look something like the following.
|
Month
|
Estimated Home Value
|
| 2022-Aug |
$800,000 |
| 2022-Sep |
$801,000 |
| 2022-Oct |
$802,000 |
| ... |
...
|
| 2052-Aug |
$1,200,000 |
5. Throughout the life of the finance term, you increase your share from 20% to 100% by paying as much as you both agree. For example, you can pay $3,000 monthly.
6. Using the spreadsheet, which is demonstrated above, you have the flexibility of paying more than the agreed-on amount. If you face financial hardship, the figures in the same spreadsheet are used to re-schedule your future payments.
7. The profit from the finance goes back to you and all other members of ICFAL.
8. If you want to get finance for a home, they can finance up to 80% of the home price, but only up to $700,000. If you want to buy a home, which costs more than $875K, you would need to start with them by owning more than 20% of its value. Obviously, these numbers might change over time.
9. No mortgage insurance is required.
10. Home (property) insurance is required.
In addition to home finance, they have several investment and finance products, including SMSF (Self-Managed Superannuation Fund.)
This information above is NOT financial advice. It is simply my understanding of their business model. Obviously, you need to contact them and get professional financial advice before taking any decisions or making commitments.
