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I have heard Interest rates are used to 'benchmark' the calculation of the 'rental'? Therefore, is this mortgage no better then an interest mortgage?

In most circumstances, the comparison between the price of an Islamic financial product and a conventional (that is, non-Islamic) product is known as "benchmarking". It is important to understand that the process of benchmarking, involves referring to a product that might use an interest rate (such as LIBOR plus a further profit margin) when determining the level of Rent charged, is not the same as charging interest under a loan. Shariah Scholars have permitted Islamic finance providers to refer to an interest rate benchmark for determining Rent provided that the benchmark is well known to everyone so that no dispute over the amount of Rent can arise in the future. If the characteristics of Ijara are present (e.g. the Bank owns the property and leases it to the customer) it does not matter that the Rent is calculated in this way.


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The entire product range offered on this website is Shariah compliant. However, from time to time we will promote relevant none Halal products where no Islamic / Halal alternatives exist. Your home is at risk if you do not keep up monthly payments due under an Islamic / Halal mortgage agreement (your lease and / or diminishing ownership agreement).