NAB unveils new Sharia-compliant home loans

author-avatar By on August 05, 2021
NAB unveils new Sharia-compliant home loans

Big four bank NAB has launched a line of Sharia-compliant home loans, which is a growing sector of Islamic finance.

Islamic Finance: Sharia-compliant home loans explained

One of the core principles of Islamic business culture is that it's based on trade-based relationships, and what this means in practice is that home loans cannot charge interest - money itself cannot earn money.

In accordance with Sharia law, a lender must provide some form of service to earn its profits. 

The most prominent model used in Australia is called 'Ijarah Muntahia Bittamleek', where the lender buys the house for the client and then rents it to them over a fixed term - usually decades.

In Western culture, this is commonly called rent-to-buy.


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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.

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