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> Islamic Loan vs Normal Loan ?, What is the different between them ? Financial

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TSinvest2229
post Aug 14 2009, 05:24 PM, updated 15y ago

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Hi,

Today I went to see my banker. Basically she propose me to take islamic loan rather than normal loan.

The package she offer was loan 200k, BLR - 2.05. As what she told me, if your are property investory
and don't know when to might sell your house, then consider to take islamic loan because you will not
impose exit penalty if your loan still within 5 years.

Do you agreed on what she said ?

Other than no exit penalty, what other benefits or disadvantages of taking islamic bank ?
wingcross
post Aug 14 2009, 05:35 PM

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I am not sure, but from what I learn about Islamic Loan or any loan that are so called Islamic, they have you sign up for the loan contract and when you want to sell (in other words breach the contract), there is hefty penalty.

Better check the documents she can show to u that there is really dun have hefty penalty. Best is if you can compare other islamic loans from other banks. Try Al Raj.
alexis_wll
post Aug 14 2009, 07:03 PM

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i think islamic loan from my understanding ( personal opinion ), most bankers ask me don't take it...

the reason is,
they said , if i take it, loan let say 100k, if over the duration of 10 years the interest is 10k, it's add up to the principle... if you re-finance or sell it house, you will still need to pay 110k to the bank even you just loan it for one year... example is one year might be 1k ...

compared to normal home loan, you need to give back the bank 100k ( principle) plus interest (in this example is 1k) ...

this is from my understanding, different bank might have different explaination
b00n
post Aug 14 2009, 08:03 PM

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There's some on-going discussion here:
http://forum.lowyat.net/index.php?showtopi...6959&hl=islamic
meryl
post Aug 15 2009, 03:11 AM

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QUOTE(invest2229 @ Aug 14 2009, 05:24 PM)
Hi,

Today I went to see my banker. Basically she propose me to take islamic loan rather than normal loan.

The package she offer was loan 200k, BLR - 2.05. As what she told me, if your are property investory
and don't know when to might sell your house, then consider to take islamic loan because you will not
impose exit penalty if your loan still within 5 years.

Do you agreed on what she said ?

Other than no exit penalty, what other benefits or disadvantages of taking islamic bank ?
*
hi, as far as i know.. there is no free lunch in this world.. very hard for me to believe there is no lock in period for home loan for the interest rate with your loan size you getting... almost impossible..
you wont see the words " lock in period " & " penalty" in the islamic loan letter of offer or the agreement..
but then, when you cancel the loan ( refinance/sell off / full settle) within the period of time.. usually is 5 years +- ( depending on the bank or package), this loan will charge you a fee , may call it exist fee.. or etc... ( actually is same as penalty charges impose in the conventional loan)

wink.gif i 'm a banker who profession in mortgage..

I believe this a Islamic Term Housing Loan .. Not a Islamic Flexible Housing Loan...

This post has been edited by meryl: Aug 15 2009, 03:16 AM
TSinvest2229
post Aug 15 2009, 02:36 PM

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QUOTE(meryl @ Aug 15 2009, 03:11 AM)
hi, as far as i know.. there is no free lunch in this world.. very hard for me to believe there is no lock in period for home loan for the interest rate with your loan size you getting... almost impossible..
you wont see the words " lock in period " & " penalty" in the islamic loan letter of offer or the agreement..
but then, when you cancel the loan ( refinance/sell off / full settle) within the period of time.. usually is 5 years +- ( depending on the bank or package), this loan will charge you a fee , may call it exist fee.. or etc... ( actually is same as penalty charges impose in the conventional loan)

wink.gif i 'm a banker who profession in mortgage..

I believe this a Islamic Term Housing Loan .. Not a Islamic Flexible Housing Loan...
*
Thanks for you info. I will get back to my banker again because as she told me will without incur any cost if
I exit my loan less than 5 years. Are all the bank with the same conditions ? BTW, my banker was from
HLB.
koopa
post Aug 17 2009, 12:51 AM

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I want to correct something stated above: Some banks dont have lock in period for islamic loan.

First off all, it depands on the bank how they want the islamic loan to be. A few months ago there in The Star, Biz section, they say malaysia does not have a standard islamic loan. So every bank has their own way.

Pros:
1. Some bank does not imply lock in period.
2. Rates capped at 9.5% or 10% or 11%.
3. Most banks done give u penalty for late payments or if u dont pay for a few months because in islam its illegal to impose interest. Infact Bank Islam let u forfeit 2 months installment in 1 year. Check out their banners.

Cons:
1. No Daily or monthly rest for installment. Depends on the bank.
2. Interest rates is not so good. This depends on banks also.

Ill add more if i remember this topic later
onnying88
post Aug 17 2009, 01:45 AM

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I have a clients just signed a letter offer from Alliance bank Islamic flexi.
Here are some T&C from the RM295k Islamic flexi LO.

Flexi loan with Current Account link up (Current account have interest)
Waived RM200 setup and RM10 monthly fee
Daily rest (comfirm)
Capped rate at 9.9%
Lock in (or whatever you name it) = 5 years
Penalty = 3% of loan amount or RM5k whichever higher
(not like alexis_wll mention)

For me, islamic is just like normal conventional loan, just the T&C follow the Islamic law. As long as you continue serve the loan and never did somethings that is not allow in islamic law, you wouldn't get any problem, just like others conventional loan. Beside islamic provide same interest rate but waive some of the charges.

Can anyone provide some cons about Islamic loan that is comfirmed?
i would like to know about it.

This post has been edited by onnying88: Aug 17 2009, 02:00 AM
alexis_wll
post Aug 17 2009, 02:29 AM

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maybe they had changed the system of it... i asked 2+ years ago lor... it's good that only have 3% penalty instead of full interest rate... good luck to all
TSinvest2229
post Aug 18 2009, 12:27 PM

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Just check with my banker. Yes, no exit penalty if loan exit within 5 years,
but just need to pay legal fee but for sure will be better than 3% penalty.

Additional info : If you are pay through machine and you want to park it under advance payment, then you can't deposit your amount 3 times higher than your loan amount, or else it will directly pay to the principal.
Eg. monthly payment is RM1k, then within a month, you can't pay more than RM3k, if you pay RM4k, this amount will directly pay to principal.


Added on August 18, 2009, 12:31 pm
QUOTE(koopa @ Aug 17 2009, 12:51 AM)
I want to correct something stated above: Some banks dont have lock in period for islamic loan.

First off all, it depands on the bank how they want the islamic loan to be. A few months ago there in The Star, Biz section, they say malaysia does not have a standard islamic loan. So every bank has their own way.

Pros:
1. Some bank does not imply lock in period.
2. Rates capped at 9.5% or 10% or 11%.
3. Most banks done give u penalty for late payments or if u dont pay for a few months because in islam its illegal to impose interest. Infact Bank Islam let u forfeit 2 months installment in 1 year. Check out their banners.

Cons:
1. No Daily or monthly rest for installment. Depends on the bank.
2. Interest rates is not so good. This depends on banks also.

Ill add more if i remember this topic later
*
For HXB, the interest rate same as normal conventional rate. Eg. loan 200k, they can offer up to BLR - 2.1.

This post has been edited by invest2229: Aug 18 2009, 12:31 PM

 

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