Allow me to share some background story: In the effort to make Malaysia as the Islamic financial hub of asia, the country has implemented a few policies to promote Islamic finance. Such policies cover pretty much all aspect of financial services including property financing.

Advantages in taking islamic financing (as far as OCBC is concerned):

1. No lock-in periods

2. 100% waiver on the stamp duty (loan legal, not spa) for the refinancing portion (for refinancing cases). Stamp duty for the loan legal fees is 0.5% of the financing amount.

3. 20% waiver on the stamp duty (loan legal, not spa) for a new house purchase loan financing, or for the cash-out portion when you refinance your house.

4. When you sign a contract using Islamic finance, it is actually a diminishing ownership between the bank to you. Meaning if you start the contract with the property being held by you (10%) and the bank (90%), over the years, the ownership is transferred from the bank to you until you own 100% of it. In the mean time, you are paying rental to the bank for staying in the house that you do not fully own. I think the contract itself makes it more fair that a conventional one. But this is just a contract speak, practically they are the same.

So in my humble opinion, technically there are a few advantages for Islamic loan, and no disadvantages as far as I can tell. As far as the "Islamic" term is concerned, it is just a name. What's important is to be profitable right?