What is the difference between conventional and Islamic home financing?

Under conventional financing, your outstanding loan consists of principal plus the interest charged on you. The interest is actually the banking institution's cost in obtaining the funds.

Islamic financing works on the concept of buying and selling where the banking institution purchases the property and subsequently sells it to you above the purchase price.

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Reprinted with permission from BankingInfo (A Consumer Education Programme by Bank Negara Malaysia)

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Knowledge Base ID :   1280
Last Reviewed :   May 22, 2014
Source :   BankingInfo
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