I am no expert in banking, islamic nor conventional, however here are some links people may fund useful. Where the link is in Malay and you have diificulty understanding it, you may want to use Google Translate.


Perbankan Islam dan BFR

Beza akaun islam dan konvensional

Differences between islamic and conventional banking

Riba - resaon behind its prohibition

answers to whom condemned islamic bank practices - scroll to the end as there seem to be another article on zakat at the top

fatwa : considering riba

this issue require expertise, to the muslims, you may want to consder what is said in this article before issuing your own "fatwa"
Dua isu sukar dpermudah

Remember that the point that you were talking about is for cash transaction and not loan, we are not paying cash to the bank. Suppose you have an unlimited cash reserve, a developer sells the house for RM100k while Islamic Bank sells for RM400k, which do you prefer to buy ?

from my understanding, it is the abolishment of abuse of investors... unlike conventional banking, our money is taken to reinvest for say 30% margin return but only a handful that is given to us... 1-2% for normal interest p.a

islamic banking is abolishment of this system and more to profit sharing....

but the con is it does not have reserve

The point is, they are using the name of Islam to permit interest rate while altering the words to profit sharing and murabahah. In Islam, there is not profit sharing when it comes to loan. Loan is there to help people who is really really in need and expect nothing in return. The payment must also be equivalent towards the amount loaned no matter how many years given for the repayment. Very simple, these banks are making it more and more complicated by these alterations just to attract those who object conventional loan system.

It would seem that the closest way to align yourself with Islamic banking principles would be to get a fixed-term loan.
The core principles of Islamic banking is to protect an invidual from financial blackmail and this would seem to be one
way to share the risk although you may be paying a bit more monthly.

a tiger bank officer told me today: There is not much difference in terms of repayment amount, max tenure, etc. in islamic mortgage package, except the following advantages :

1. islamic loan has 20% discount on stamping fees
2. islamic loan has no lock-in period...good for flipper!

I want to know what are the disadvantage of taking an islamic mortage , can someone with a full cycle of taking and exited islamic loan (finished serving or refinanced) share your experience here?

As I know advantage only no late payment charges cause my friend paid his car loan once a year when road tax expired.. if the car don't have road tax I didn't know when/how he paid the loan.. Con, no discount given on early settlement cause selling price has been agreed.

Very simple, who do business dont want to earn?

Even though still Islamic terms, bank still need profits.

Islamic just a terms and different meaning/method and bla bla. In the end who dont want to earn? so win win for both sides.

There is still a interests involved. But just turning around.

I lend you 100k you pay 100k after 5 years no riba added! Bank close down do what? ZzZz

---

Added on November 17, 2011, 1:43 amYep true as well. Islamic terms you are bind to the agreement. Conventional is flexible

---

Added on November 17, 2011, 1:46 amMost muslim ppl that is strong at religious part all go Islamic.

For those just 50/50 does not matter.

End stories riba still have. But just a other word/turning make things sound like no riba.



This post has been edited by stevenryl86: Nov 17 2011, 01:46 AM

thanks... the highlighted point is extremely important then. I wonder how it works if tiger bank says their islamic package has no loc-in period.. does that mean even if I sold off my property at x year, i still have to repay the full amount of the selling price agreed (which I heard can be many folds !!) ?

This post has been edited by numbertwo: Nov 17 2011, 09:43 AM

hhah... like this topic... ok yup... i agree that there r certain practices islamic banking and conventional r the same... but these practices have been converted based on syariah compliance coz all of the conventional concepts use r HARAM for muslims. etc BLR=BFR, MRTA=MRTT, INTEREST=PROFIT BANK. Besides there similarity... there are differences from islamic banking and conventional(especially al-rajhi bank):

1) The process used in islamic banking is trading, so u have right to claim the commodity for ur one purposes. Conventional banks is based on lending.
2) Capping rate- for islamic banks, they can only take profit.. based on their capping rate for example ; alrajhi banks capping rate is 10%. so even the BLR/BFR went over 10%... silamic banks still maintain the same.
3) No Late Payment Charges- For alrajhi bank, if u dont pay your installments 3 months.... they will not charge u any cent... b coz if they charge u, this will consider riba' based on arab saudi's syariah compliance.
4) No Default Rate - Al-rajhi bank dont have default rate. For conventional banks, if u dont pay ur installments for 3 months, the bank has right to change the interest rate without prior notice to the customers. For instance... the campaign price is -2.40%, once u default... the bank willl change the rate given to +2-4%, meaning BLR 6%+4%= 10% u must pay to the bank... AYYYOOO
5)Profit Sharing- If al-rajhi bank is involved in an auction... they will take only the outstanding balance... and the rest will be given to the owner. nice right??

For further information u can contact me:

Nik (0192752857)
Executive Home Finance
umair@alrajhibank.com.my
http://proud2be-alrajhi-homefinancing.blogspot.com/

The thing I dislike about Islamic banking at this time, for example,
they buy your house at 300k and then sell it to you at 1 mil which is calculated/estimated max price 30 years later. That IMO seems oppressing.

You're rite

Hi, anyone heard of maybank Commodity Murabahah Home Financing-i?
I was offerd this kind of loan from maybank.

Anyone knows the pros n cons of this kind of loan.

Whats the difference btw Commodity Murabahah, BBA and MM?

I believe all of them have the same term (BFR, loan tenure, etc....), it just how they structure the contract to make it syariah compliance. Commodity Murabahah I believe is based on Tawarruq concept, where you (home buyer) will purchase some syariah compliance commodities from the Maybank (maybe CPO), at pre-agreed profit rate, where the sums will be pay in instalment. The bank then will sell the commodities you bought from them to some commodities broker, where the proceed of the sales will be transferred to your account, to be used to purchase the house.

I believe Maybank create this product as an alternative to their BBA and MM, where some middle east scholars reject BBA, because they believe BBA transaction is not valid/syariah compliance because the transaction of BBA is just to create debt obligation, and there is no real trade from such transaction.

HI Guys,
Need some help here. I am just confuse whether to take conventional or islamic. I was offered Maybank Commodity Murabahah Home Financing-i. The ceiling rate is 10.6%. MY property value is around 250k and the Ceiling Profit rate is arnd 1.1mil. BFR is - 2.40% daily interest. I went through some thread and found out that , for islamic, even if you pay more to the principal, you can't reduce the interest as its already been calculated upfront and fixed. Meaning you have to continue paying the same amount every month as usual. This property is for investment and they offered me no lock in, no penalty for exit and less late payment chargers. Banker told islamic is better for investment but im nt sure. Really hope someone could advice me over here. Thanks alot!

u taken the islamic loan?