Islamic Construction Finance

Looking to build your family home or an investment property?  Sharia Finance can help.

Can I Build Using Islamic Finance In Australia?

Islamic construction finance is available in Australia. When looking to construct a new property, there are a few different ways that this can be achieved. The most common forms of construction include:

–        A house and land package

–        Purchase of land and separate application for construction

–        Subdivision of land and separate application for construction

–        Development finance e.g. 1 into 2 developments

–        Commercial developments

–        Refinance of land into construction finance

At Sharia Finance, we have negotiated with our panel of funders to be able to offer you construction finance for a range of purposes. We can assist with construction finance for a family home as well as investment and commercial purposes.

If you have a unique construction scenario that you would like to discuss with us, simply request a call back from our team..

What Deposit Is Required When Building?

The deposit requirements for a construction loan can be as low as 5% + government fees and charges for an owner-occupied house and land package. This deposit can sometimes include government grants and concessions as well, e.g. the first home-owners grant.

Please note that the above example is based on a house and land package. The deposit requirements may change if you are to buy land first.

Are There Different Types Of Islamic Construction Finance?

There are multiple types of Islamic construction finance in Australia, and these are largely defined by the finance contracts. Below you will find a list of the most common forms of these contracts. Please note that not all are available in Australia.

Ijarah Muntahia Bittamleek (Rent To Buy)
This is a form of rental agreement where a funder will finance a property and you will pay agreed rental instalments to the funder. These rental instalments can be either fixed or variable and will occur over an agreed rental period. In addition to paying rent for the portion of the property you do not own, you will also make additional payments to buy back the ownership from the funder. At the end of the lease period, you have the option to buy the property from the funder. The amount the funder sells the property for at the end of the agreement is typically a couple of hundred dollars as your have fulfilled your rental agreement.

Ijarah wa-iqtina (Lease with gift)
This is a form of rental agreement where a funder will finance an asset and you will pay agreed rental instalments to the funder. These rental instalments can be either fixed or variable and will occur over an agreed lease period. The difference between Ijarah Muntahia Bittamleek and Ijarah wa-iqtina is that with the latter, at the time of purchase – the funder signs a separate agreement to ‘gift’ the asset at the end of the rental period rather than to sell it to the client.

Are there other contracts except Ijarah Contracts?

Diminishing Musharakah

Diminishing Musharakah is a type of finance contract where there is a ‘co-ownership structure’ of the asset. The funder and the borrower jointly purchase an asset together. When this occurs, the funder acts as an investor or entrepreneur and financially backs the client to buy a property. The funder will take a percentage ownership in the property proportionate to the amount that they finance. With this type of agreement, the purchaser will buy back the units of the property that is owner by their investor. By doing this, the funder acts as an investor and jointly owns the asset and slowly sells it back to them over a pre-agreed period.

How Does Sharia Finance Help?

It can be difficult to navigate Islamic Construction Finance in Australia. At Sharia Finance, our team of Islamic specialists has significant experience helping our clients around Australia to successfully apply for Islamic Investment Finance.


Our team support you every step of the way including discussions about different Islamic funders and their contracts, negotiating with the funder on your behalf and managing the application all the way until the funds are paid.


If you would like to speak with us about your personal circumstances, simply give us a call or request a call using our online booking platform.

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Eligibility Quiz

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