Islamic Finance Question

[nikaiyo2]

As I understand it Islamic finance basically works by the lender calculating the interest on the loan adding this amount as fees then dividing the total by the required term, to avoid “charging” interest.

Does that mean that the interest rate is fixed for the entire term?

[Alex Z]

nikaiyo2 said:

As I understand it Islamic finance basically works by the lender calculating the interest on the loan adding this amount as fees then dividing the total by the required term, to avoid “charging” interest.

Does that mean that the interest rate is fixed for the entire term?

Yes, but that’s the case for pretty much all personal loans anyway.

For mortgages it’s a little different, as per https://www.comparethemarket.com/mortgages/content...

[nikaiyo2]

Alex Z said:

Yes, but that’s the case for pretty much all personal loans anyway.

For mortgages it’s a little different, as per https://www.comparethemarket.com/mortgages/content...

Sorry yeah it’s mortgages I was interested in I presume the higher fees etc make the stability of interest rate much less attractive

Edited by nikaiyo2 on Sunday 25th February 20:33