What is the alternative to interest based transactions, especially home mortgages, for Muslims in the West?

Islam urges Muslims to unite and co-operate as one brotherhood. Islamic banks or financial institutions have to be formed wherein Muslims may deposit their funds and borrow without being drawn into the sin of interest. Such institutions may embark on profit sharing ventures thereby generating capital, which would be returned to the investors as dividends.

In fact, over the fiscal year (1980-1981) when Pakistan began to change over to interest-free banking, the dividends returned to investors in such banks were greater than the existing bank interest rates. This becomes especially important in Muslim minority communities where its members are often times unable to afford the costs of undertaking business ventures on their own, or of purchasing homes outright etc. If such communities would pool their resources and re-invest them within the community in the form of profit sharing loans, a high level of economic unity and growth independent from the outer society could be attained, Muslim businesses would in turn generate jobs for Muslims as well as surplus capital which would then be re-circulated in the Muslim community as Zakat, charity, loans or investments. Such economic growth and development is absolutely necessary to finance some of the basic institutions essential to the development of a viable Islamic community. For example, Islamic schools have to be funded by the community’s commercial establishments as tuitions are not only insufficient to maintain a private school, but they often deny the children of the poor segments of the community the right to an Islamically oriented education. Most Islamic schools, which have depended on donations from overseas, have folded after a few years of operation, as overseas Islamic institutions are often unwilling to keep shelling out large sums of money year after year for the same project.