How it works


So how does Ijarah work?

In an Ijarah agreement (or lease agreement), the financier purchases a property on behalf of a client and then leases it back to the client. In return, the client makes agreed rental payments with the view of taking legal ownership of the property once the payment terms have been met. In the meantime, the client enjoys full rights and access to the property during the “ijarah” or “rental” period.

Here is a breakdown of the steps involved to obtain Ijarah Finance

  • A client makes an application to Ijarah Finance.
  • Conditional approval is issued once a serviceability check is undertaken, documents have been verified and credit checks have come back satisfactory.
  • The client becomes the Wakeel of Ijarah Finance. The client/Wakeel identifies the property to be purchased by the funder and leased by the client in order to own.
  • The client and funder enter an Ijarah contract whereby the client agrees to pay rent for the property from the funder by making regular rental or “ijarah” payments.
  • The client has the right to occupy the property whilst the funder holds a mortgage in the property.
  • The client may sell the property or purchase the property outright at any time provided the funder’s interests in the property are settled (i.e. all outstanding rentals amounts are paid out).
  • The client may seek to refinance to another financial provider including a major bank provided they can pay out their outstanding rental payout figure.
  • Once the final lease payment has been made by the client, the financer will sell its share in the property to the client for a discharge fee which is currently $100.
Scroll to Top