Murabaha vs. Conventional Loan

Conventional Loan
Contract Structure
Installment credit sale contract where you sign a contract assigning Devon Islamic to be your intermediary (money is not lent to you directly) to purchase the property for you & then you immediately purchase the property from Devon Islamic & sign a Murabaha contract for the balance amount due on the purchase price of the house.
Interest based lending agreement and transaction. You sign a contract to directly purchase the property. Money is loaned to you directly & you sign a promissory note that states the principal amount & rate of interest at which the principal will be repaid.
Profit Rate vs Interest
Profit rate is calculated based on fixed rate financing without any additional costs & cannot be compounded.
Interest rate is calculated based on the money loaned to you & can be compounded.
Risk Factor
A more equitable transaction where the risk is shared.
Customer bears all risk.
Penalties & Late Fees
Late payment fee charged to encourage timely payment by the buyer. Fee is donated to charity and will not be profited by Devon Bank
Late payment fee charged to encourage timely payment from the borrower.