Islamic Loans Hit NZ
PRESS RELEASE – NEW PRODUCT
For Immediate Release
Web info: http://www.argosyfinance.co.nz/islamicloans.htm
Islamic Loans Hit NZ
Argosy Finance is shortly to launch the countries first Islamic-style home Loan. In a current environment where many businesses are cautious to mention the words Islam or Muslim this is a positive step to recognise this cultural group and offer a financial service specific to their needs.
These loans have been available throughout Europe and Asia to both Muslim and Non-Muslim home buyers for many years. In essence, an Islamic home loan is without the traditional interest component that New Zealanders are used to.
“Other than the $50 million in mortgage lending that we offer to English speaking New Zealanders every year, Argosy has recently begun taping into the Korean and Chinese market and see a natural synergy in providing a service to the Muslim community” Martin Fuller of Argosy Finance comments.
The Islamic form of finance is as old as the religion of Islam itself. Central to Islamic finance is the fact that money itself has no intrinsic value. 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. Money must be used in a productive way.
Argosy’s managing director Martin Fuller comments that there are an estimated 20,000 Muslims living in New Zealand and until now no financial institution has offered an Islamic product for them. “The potential market is too small for the banking sector but viable for a smaller mortgage bank like ourselves, Fuller says.
How Islamic Home Loans Work?
- The property title is in the name of an independent trustee
- The trustee pays for whatever borrowing is needed on the property and insurance.
- A ten year contact is entered into between the occupant of the property and the arranger
- The occupier has an option to buy the property outright during the next ten years (agreement may be rolled-over). The occupant enters into a "Licence to Occupy" the property which enables them to live in the property for a monthly fee.
- The occupant lodges funds of currently no less than 20% of the value of the property. (The requirement of 20 % of the value of the property is likely to reduce to a lesser amount in the future)
- These funds are held on account. No interest (riba) is paid on these funds but the profit from trading these funds will reduce the cost of the eventual purchase of the property or offset the monthly fee of a "Licence to Occupy"
- The occupier is responsible for paying rates and maintaining the property
- An application is made in the normal manner for the purchase of a new property or the replacement of an existing interest (riba) loan with an Argosy Islamic-style arrangement.