30-year-old Girl has No Interest

Hi Scott,

I’m a 30-year-old married Muslim woman living in Sydney. Being Muslim makes it very challenging to buy a first home. I am sure you are aware that Muslims are prohibited from dealing with interest. I am ready to take all the Barefoot Steps but I don’t know how I can do so without dealing with interest. My family came to Australia in 1991 – and 31 years on they are still renting because they haven’t been able to save $1 million in cash. Many Australian Muslims are in the same boat. I want to be able to own a home and provide safety for my children and not be in the same situation that my parents are in 30 years from now. What can I do?

Rina

Hi Rina,

What an interesting question!

There are a number of institutions that do Islamic finance.

NAB, for instance, has a product that they claim meets Islamic law requirements by structuring the loan as a lease and charging ‘rent’ instead of interest. (It’s a bit like my kids telling me they’re eating fruit … while digging into a bowl of Froot Loops).

Anyway, I asked my favourite Muslim, Nazeem Hussain, about Islamic finance, and he gave me the following fatwa:

“I think it’s like halal meat. The animal is the same but it’s how it’s slaughtered that matters.”

Touché!

When you’re dealing with any banker, the trick is making sure you’re not the one getting skinned.

I reviewed some rates of Sharia-compliant home loans and they tended to be quite a bit more expensive than the cheapest standard variable loans. However, I still think it might be a good deal for you. Reason being, Rina, it’s almost impossible for a working-class couple to save up cash and buy a house in Sydney. It’s like chasing a moving train.

Toot! Toot!

Scott.