Consumer & Retail Banking
Consumer & Retail Banking

Differences in KPR Syariah and Conventional

Currently there are two types of Banks in Indonesia, namely Sharia Bank and Conventional Bank, each of which has a significant difference. One of the things that will be discussed by Bank Muamalat this time is about the difference in mortgage financing system in Bank Syariah and conventional Bank.


The difference between KPR Bank Syariah and Conventional Bank is the method of calculating liabilities. In sharia financing there is no interest calculation as in the credit scheme in conventional bank. So no known terms of cheap or low interest in sharia mortgages. With sharia financing, the repayments you have to pay each month are fixed, equal throughout the loan term. Meanwhile, conventional mortgages offer fixed installments only in 1 to 3 years at the beginning of the credit. After that the bank uses flowers that expand the size following market conditions so that the installment can change at any time.


Why is the mortgage loan fixed in the sharia loan? because in shariah financing house prices and bank profit margins have been pegged at the beginning of the credit agreement. The amount of profit or margin for the bank has been agreed from the beginning. Unlike the conventional mortgages that interest rates are expanding depending on market conditions because the interest is not pegged so it can be high, can also be low.


To be more clear, here are examples of illustrations: For example, the financing of a house worth Rp 500 million for a 15-year credit period. The results for each type of mortgage are as follows:

  1. Conventional mortgages use fixed interest rates in the first two to three years which are then followed by floating interest following market conditions. In the first 3 years you pay a fixed installment of Rp 5.7 million. Stepping on the 4th year onwards, the installment increased to Rp 6.3 million or higher because the interest is still replaced by a floating rate (flexible rate).
  2. KPR syariah using murabahah scheme (sale and purchase), the fixed installment to be paid is Rp 6.3 million during the credit period.


From the results of this comparison, you can see that in the beginning of the credit, the first 3 years installment with conventional mortgages are lower, but that need to be underlined after the fixed interest period, step on the 4th year onwards conventional mortgage installment with floating interest rate becomes high compared to fixed mortgage repayments.  


Such a brief overview of the difference between sharia and conventional mortgages as information for you. For you customers of Bank Muamalat who already have a partner, you can apply mortgage Bank Muamalat Indonesia by using a source of joint income (joint income) to perform this financing program with the couple.


Get information on other terms, administration fees, and insurance fees on this link

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