Islamic vs Conventional Mortgage Calculator

Two different structures, not two brands of the same math. A conventional reducing-balance loan charges interest only on what's still outstanding, so the interest portion shrinks every month as the balance falls. A Murabaha-style Islamic product agrees a fixed profit amount upfront (based on the full financed amount for the whole term) and spreads it evenly, so the profit portion of every instalment is identical from month 1 to the last. Because of this, an Islamic product quoted at the same headline rate as a conventional one usually costs more overall, since banks price around this by quoting Islamic profit rates lower than the reducing-balance rates they compete with, which is why this tool asks for each product's own quoted rate rather than assuming they match.

A simplified, illustrative model of the common structural difference, not a specific bank's exact product terms. Real Islamic mortgage products (e.g. diminishing Musharaka, Ijara Muntahia Bittamleek) can work differently again. For comparison only, not financial advice.