Posted by: islamicfinancingnews | June 16, 2012

Islamic finance can have different rates

It’s not just about getting the Islamic mortgages you need to be sure you get the terms that are free from Riba. There’s even more to getting the right Islamic finance than that. It’s important to get either a fixed or variable rate.

Getting one or the other is really all about what kind of a risk you want to take with your mortgage. With a variable rate, the chances are good you’ll save interest payments over the course of the term, but you’re always taking the chance here that the rates can go up unexpectedly and you’ll have to deal with the fallout.

The fixed rate is considered to be the more steady course although there’s not as much possibility to save on the interest. However, if you’re planning on having a strict budget when you buy your first home, having one of these fixed rates is a good idea so that you’ll be able to set aside the money for the mortgage payment on a constant basis.

Islamic finance has some fundamental differences from its more traditional counterparts but there are basic structures that are the same. The variable versus the fixed mortgage rate is one of the decisions you’ll need to make.

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