Posted by: islamicfinancingnews | January 21, 2013

About Islamic loans: Consider fixed versus variable rate mortgages

islam41 Once you’ve decided on Islamic loans in order to stay Sharia compliant and away from Riba, there are other factors you need to mull over that are generally associated with more conventional Western mortgage products. The pros and cons of a fixed versus variable rate mortgage is one of these. Considering some of the more traditional aspects of each will help you to find the right one.

The variable rate mortgage is perfect for the person that doesn’t mind watching the fluctuations in the interest rates and staying on top of all the changes. A low rate means you’ll pay less interest and a high rate affects your money the opposite way. Although these variable rates can often be locked in when they start to climb out of your comfort zone, it’s important to keep in mind lending institutions often have a penalty for this.

The fixed rate mortgage is for the person that wants to know how much of their payment is going toward the principal every month. This is often the choice for people that have long-term plans for the property they presently live in. The family with a longer term view often feels better with one of these mortgage products.

Islamic loans are different in many ways from their more conventional counterparts, but there are some similar features as well.

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