Ijara loans and choosing the right mortgage rate

When you’ve decided to start the journey toward owning real estate with Ijara loans, you’ve made the right first step when the goal is to stay Sharia compliant and financially  savvy.  Still there’s more to making the right choices than just being a practicing Muslim;  choosing the proper mortgage rate is another factor that needs to be carefully considered.  Here’s a brief overview of what you need to know.

Fixed rates

This is the option that many first time home buyers start with for the simple reason that the payment amounts don’t change over the term of the loan.  With a fixed rate, you know how much of your payment will be allocated to knocking down the principle on the outstanding amount. The down side here is if the rates go down in the market, you’ll miss out on the additional savings.

Variable rates

While these are generally more risky, this is where the savings can be had. Variable rates, like the name suggests, fluctuate with the interest rates. That means you can have more of your monthly payment go toward the  principle when the numbers are low . However you stand the chance of having the rate go higher too.

Ijara loans are the proper way to stay Sharia compliant, but it’s important to learn the other aspects of how mortgages work as well.