How can I tell which Islamic mortgage loan is better? I am quite confused with their loan structure
RED: Islamic mortgage loan is a financing model structured to be in compliance with Islamic concepts. The main difference is that the interest element is strictly prohibited and replaced with the concept of pre-determined profit. Think of a conventional loan, just replace the concept of interest with profit and there will be some trading of certain commodities to justify the profit. Key considerations when selecting Islamic financing are similar to conventional financing, such as profit rate, loan tenure, lock-in period, and etc.
By Chris Tan, legal advisor