DAR AL HARB - NEW ZEALAND: SHARI'AH COMPLAINT MORTGAGES TO BE AVAILABLE FOR MOSLEMS IN NEW ZEALAND

NZ Muslims to be offered Islamic mortgages

Hamilton businessman Abdullahi Dayib, has set up his own company, Al-Haramain Islamic Finance, to offer New Zealand's first Islamic "mortgages".

He is a Muslim, whose religion bars conventional borrowing with interest payments, the Wall Street Journal reports.

Mr Dayib, who is Somali-born, said shariah, or Islamic law, deemed the payment or receipt of interest -- known as riba -- akin to usury.

As a matter of faith, a Muslim cannot lend money to, or receive money from someone and expect to benefit -- interest (known as riba) is not allowed. To make money from money is forbidden -- wealth can only be generated through legitimate trade and investment in assets. Islamic investment funds are also banned from investing in companies associated with tobacco, alcohol or gambling.

"We Muslims have a lot of banks willing to lend money, but we can't just go into banks and borrow," said Mr Dayib, a New Zealand citizen.

He is now waiting for his mortgage product to be approved by Islamic clerics so he can start offering it to New Zealand's 36,000 Muslims who, he says, have been held back by their inability to raise cash like other New Zealanders.

"I know how difficult it is to get funding that is interest free and on Islamic principles -- that is what made me set up the firm," he said.

New Zealand and other countries with small, fragmented Muslim populations have had few Islamic financing products, partly due to low demand, and the knowledge gap between conventional financial institutions that have an incomplete grasp of Islam and Islamic scholars who know little about finance.

Muslims make up less than 1 percent of the NZ population, and ASB Bank, the nation's largest mortgage lender, said it had not had enough demand for Islamic mortgages.

But several financiers are already offering or preparing to offer Islamic loans. Al-Haramain will be a broker for an Islamic-style home ownership programme called Manzil (home), and three other conventional firms, Argosy Property Finance, Global Home Loans and Tasman Mortgages Ltd will act as mortgage managers for such arrangements, the newspaper said.

Manzil allows for an occupier to put down a 20 percent deposit with the balance held by a trustee company which pays the remaining 80 percent. The occupier pays a fixed rent and has a right to complete the purchase of the property over 10 years, with an additional payment of 10 percent of the increase in the house value over the decade. The arrangement can be rolled over for a further 10 year period if required.

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