At a time when failed mortgages have led to collapse of major banks and foreclosure of millions of homes in the US, a credit union in Canada has introduced Islamic mortgages for Muslims.
The Assiniboine Credit Union (ACU), based in the city of Winnipeg, has launched what it calls the Islamic Mortgage Programme to help devout Muslims fulfill their dream of owning a home. Following strict Islamic laws which condemn interest on loans as usury, the credit union will not charge any interest from the borrowers.
Under the Islamic Mortgage Programme, the credit union will enter into an agreement with the borrowers to own a share in the property bought with its money.
Rather than charge interest from the borrowers, the credit union will sell its share of the property over a period of time agreed upon by the two parties. During the period of the contract, both the credit union and the family will co-own the home.
"During this time, the family has exclusive rights to live in the home and in exchange they agree to pay ACU a profit. At the end of the contract, the Muslim family is the sole owner of the home,'' according to the credit union.
Since devout Muslims in Canada don't take out traditional bank mortgage, a spokesperson for the credit union justified the Islamic Mortgage Programme, saying, "It was an issue of financial exclusion for the Muslim community.''
Of about one million Muslims in Canada, 13,000 live in Winnipeg which is the capital of Manitoba province.