1. Customer Help Centre
  2. Finance
  3. What makes our Home Finance Halal

How can Variable rates be Halal and do the rates change often?

Our Sharia Advisers have allowed us to offer both variable and fixed rate financing options. Unlike traditional banks, our financing rates are not pegged to the Reserve Bank's interest rates and are not connected to the market interest rate. This means that our customers' finance rates will not be affected by changes in the market interest rate.

Our financing rates are determined by the underlying risk associated with the lending activities. If an investor invested $1M in 2019 and those funds were used to fund the debt of a borrower, the finance rate may be 4% to compensate the investor for the underlying risk of the transaction. However, if economic conditions weaken due to factors such as COVID-19, the underlying risk may increase and the finance rate may need to be increased to compensate the investor for taking on more risk with their investment. In this case, the borrower's finance rate will reflect this increase.

It's important to maintain a balance between the interests of investors and borrowers, as favoring one party over the other can have negative consequences. As Investment Managers and Lenders, we strive to ensure that both parties' interests are taken into consideration.

In addition to variable rates, we also offer fixed rates with terms ranging from 1 to 5 years. This provides our clients with flexibility in choosing the financing option that best suits their needs.