Posted by: islamicfinancingnews | April 22, 2012

Choosing the right monthly payment structure for Islamic mortgages

It’s important to understand the payment terms for both conventional and Islamic mortgages when you’re dealing with all the choices Islamic finance has to offer.

Most people prefer to make one monthly mortgage payment while others pay bi-weekly. The thinking behind the latter option is that by generating two monthly payments instead of one, the debt will be paid off faster. Paying bi-weekly means you are actually producing 13 monthly payments over the course of one year compared to the usual 12 payments. This extra month’s payment is applied to the principal which can reduce the amount of the loan over time.

However, many homeowners find it’s better to make extra payments on the mortgage when the opportunity arises such as in a calendar month where you receive an extra paycheque, or if you receive a healthy tax refund, rather than being obligated to make bi-weekly payments. Talk to your lender to make sure any extra payments you make are applied to the principal amount of your loan.

It’s important for you to make the right choice when it comes to obtaining the proper Islamic mortgages to best suit your financial circumstance while abiding by Sharia law and avoiding Riba at the same time.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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