Your questions answered
Home finance is a way for individuals to purchase a residential house or apartment or land (we’ll refer to these collectively as “property”) with financial support from a third party, such as Crescent Finance.
Usually, home finance involves the individual providing an initial “deposit” (part payment) for the purchase price of the property, and the third-party providing funds to cover the rest of the purchase price. Over time (usually a number of years), the individual then pays instalments to the third party so that, eventually, the individual fully owns the property.
While everyone’s circumstances are different, there are several common reasons why people obtain home finance to purchase a residential property:
- A step on the property ladder
Only some people can afford to purchase a residential property outright with cash (the median price of residential dwellings in Australia is climbing towards $1 million). Home finance gives you access to additional funds necessary to purchase a residential property.
- Financial confidence
Australians are struggling amid a rental crisis that some commentators describe as the worst since the 1930s Great Depression. Rental prices have climbed across cities and regional areas while the supply of rental property has slowed. Even if you can find and lock-in a rental property that you can afford, your monthly rent payments go directly into your landlord’s pockets. You are effectively building your landlord’s wealth, not yours. But when you purchase a home using home finance, your regular repayments are an investment in your future; over time, you are building up equity and working towards owning the property outright.
- Lifestyle convenience
Renting a property is a temporary arrangement (typically, rental agreements last for 12 months, and landlords are not obliged to renew these), which means you may have to move home when you don’t want to. Living with that uncertainty can be stressful, and moving home regularly can be a strenuous (and expensive) exercise. But when you purchase a property with home finance, you can settle in one place with much greater certainty.
- Make choices about your home
When you purchase a property with home finance, you have the freedom to make decisions about how the place looks. Many homeowners enjoy home improvements and undertake renovations to tailor the property to their needs and tastes.
- A sense of community
When you live in your own home, you can confidently put down roots in your local community. It’s an opportunity to build lasting relationships with neighbours, locals, teachers, and businesses in the area.
Crescent Finance offers two home finance options:
- Buying a home
- Refinancing a home
Islamic home finance provides a way for Muslims and non-Muslims to purchase residential property in a way that is Shariah-compliant, ethical and transparent.
Islamic home finance principles refer to a home ownership philosophy that differs substantially from the conventional approach in Australia. At its core is avoiding riba (interest) and providing a more equitable home finance option to the community.
Most home loans are not Shariah-compliant because interest is charged and most financial institutions are not prohibited from investing in industries such as gambling, alcohol, tobacco, weaponry, and interest-earning organisations.
Crescent Finance now offers a Shariah-compliant home finance option for Muslims and non-Muslims in Australia.
Unfortunately not. Under Islamic commercial rules, it’s unacceptable to buy or sell something of no intrinsic value. This makes traditional Australian mortgages problematic, as the interest (or “riba”) paid by the home buyer is not actually paid for the home itself. The interest is effectively paid to the lender in exchange for using their money.
Furthermore, under Islam a loan is intended to be a way for one person to help another who is suffering hardship. The borrower need only repay what they borrowed. Loans should therefore be aligned with altruistic principles as opposed to traditional Australian mortgages, which can create financial stress and burden under certain circumstances.
That is why Crescent Finance has designed Shariah-compliant home finance.
Islamic home finance works differently to traditional Australian mortgages. Crucially with Islamic home finance, there is no interest (or “riba”) involved. The lender earns a profit in other ways, and the relationship is different from a lender/borrower relationship. Islamic home finance provides authentic structures where the financial institution and the home buyer co-invest funds.
Our Ijarah home finance product adheres to Islamic principles and values, guided by the independent expertise of Amanie Advisors. Amanie Advisors is a leading Shariah advisory firm, guided by its Shariah Supervisory Board that is represented by senior Shariah scholars in the international arena that specialises in Islamic finance solutions.
The scholars of Amanie Shariah Supervisory Board. have certified that the product, its application, terms and conditions and relevant documents are in compliance with Shariah principles. An additional aspect is our commitment that our home finance product undergoes an annual Shariah audit evaluation using a similar approach.
View certification here.
No, it does not. We will review our financing arrangements with you at fixed intervals. This may, or may not, result in a change to the rate that applies to you at the time of the review.
For conventional non-Islamic mortgages, they simplify to a loan advanced by a lending institution to its customer. They generally involve a product that may use an interest rate (such as BBSW plus a further profit margin) when determining the level of instalments charged to the customers.
Shariah Scholars have permitted Islamic finance providers to draw reference from an interest rate benchmark for determining instalments, provided that the benchmark is well known to everyone so that no dispute over the amount of instalments can arise in the future. The key is that the characteristics of Ijarah are present. This process is not the same as charging interest under a loan.
Not at all. Our customers come from a wide spectrum of cultures. If responsible, ethical finance is important to you, then please consider Crescent Finance.
At Crescent Finance, we believe transparency is important when we connect with our customers. We source funds from investors (who are paid a regular revenue based on rental payments made by the owner) or it may come from wholesale markets.
As mentioned above, our Ijarah home finance product adheres to Islamic principles and values, guided by the independent and respected expertise of Amanie Advisors. Amanie Advisors is a leading Shariah advisory firm, guided by its international Shariah Supervisory Board, that specialises in Islamic finance solutions.
The scholars of Amanie Shariah Supervisory Board have certified that the product, its application, terms and conditions, and relevant documents are in compliance with Shariah principles. An additional aspect of our home finance’s appeal is our commitment to undergo an annual Shariah audit evaluation using a similar approach.
View certification here.
You will be required to do so as part of home finance. As Takaful (a form of insurance that is based on Islamic values and principles) is not currently available in Australia, it is mentioned in the Islamic Agreement that you will be purchasing the insurance on behalf of us.
The client’s name will be registered on the title, on the Shariah understanding that during the agreement period that the client will be holding the property as agent of Crescent Finance.
Applying for home finance
Applying for Crescent home finance is a simple three-step process:
Step 1: Register your interest by providing your details to us.
Step 2: We will go over your details.
Step 3: A Crescent Finance representative will contact you to discuss your home finance requirements and any questions you might have.
Once you’ve registered your interest in Crescent Finance’s home finance solution, our team will begin to have conversations with you regarding your home finance requirements and any questions you might have.
If your expression of interest is a suitable match for the initial home finance solution, our team will contact you and ask you to provide some prequalification information that will form part of your application.
During any stage of this process, we may be in touch with you to request further information or provide you with information so that you are better placed with regard to the home finance process.
After you submit your completed application online you will hear from Crescent Finance within two business days.
No, these are fees that have been paid for the services that the funder and the valuer have rendered on your behalf and are therefore non-refundable. The funder and their insurers need a valuation report to be able to assess your application.
Paying the finance processing fee or for a valuation report does not mean an automatic approval.
Switching to Crescent Finance from another home finance provider
We do things differently to many Australian mortgage lenders. We don’t charge interest (or “riba”).
Islamic principles forbid the charging of interest, so our halal home finance arrangements tap funds from investors who are paid a regular revenue based on the installment payments made.
If you want Shariah-compliant home finance – you should consider Crescent Finance. If you want a transparent and ethical home finance system, you should consider Crescent Finance. And if you want the process of switching your home finance to be simple, then, you’ve guessed it – you should consider Crescent Finance.
We provide structures where we co-invest funds with our customers.