Posted by: islamicfinancingnews | April 10, 2013

Islamic mortgages and paying off mortgage debt

islam21 One feature most people share in common whether they are applying for conventional mortgages or Sharia compliant Islamic mortgages is the desire to pay down the debt faster and become mortgage free sooner than later.

For example, you should look for flexible prepayment options which will allow you to make extra payments towards the principal amount of your mortgage without incurring any penalty fee or extra charges. Some programs will allow you to increase your mortgage payments by a certain amount once a year depending on the type of mortgage you have, while others allow a lump sum payment against the principal amount of the mortgage once every year in addition to increasing your payments.

Paying more each month will shorten the amortization, significantly reducing interest payments over time for conventional mortgages. More frequent payment options such as weekly or bi-weekly payments can save even more money and accelerate your plans to become mortgage-free. While conventional amortization calculations are used to determine the monthly payment amount for Islamic mortgages, each payment in this mortgage process increases the share of ownership until the entire amount is paid and the customer takes over ownership of the property.

It’s important to talk honestly with your Islamic finance lender who can evaluate your situation and recommend the most suitable mortgage program to suit your needs.

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