Northern Jutland, Denmark now has Sharia Inspired Loans!

On March 13, 2008 · In Denmark, Islamic Law, Shariah Banking, SUKUK

Denmark: Banks offer Sharia mortgage

hat tip-Janet L.

Three local banks in northern Jutland are now offering Sharia-law inspired loans, reported public broadcaster DR.Several hundred predominantly Muslim customers have shown great interest in the new ‘Amanah Kredit’ mortgage, offered by Sparekassen Farsø, Sparekassen Vendsyssel and Sparekassen Hobro in conjunction with Den Jyske Sparekasse.

Niels Møgaard, director of Amanah, which is the company created by the four banks to handle to new mortgage, said that loan arrangements were well under way for the region’s Muslims – especially in the city of Aalborg.

What makes this loan different from an ordinary loan is that Amanah buys the property that the customer is interested in and then sells it to the customer with a conditional deed, so that the buyer can use the property but will only own it outright after the last mortgage payment is made, typically after 30 years.

This model is based on the Sharia-approved Islamic financing system, which involves ‘Musharaka’ (partnership), ‘Ijara’ (rent) and future ownership, ‘Tamalluk’. The property buyer does not pay interest on the loan and therefore does not create debt.

Source: Copenhagen Post (English)