Canadian authorities are looking to make Islamic home financing accessible to more Canadians.
Global News reports that the government is “exploring new measures to expand access to alternate financing products, like halal mortgages,” as part of the 2024 budget.
In March, the government started consulting financial services providers and communities to understand how policies can better support the needs of all Canadians seeking home ownership.
None of Canada’s six big banks offer halal mortgages, interest-free structures based on Islamic principles. However, some lenders in the country have been offering halal mortgages for several years.
A halal mortgage is a real estate financing method that complies with Islamic principles and teachings. Under Sharia law, Muslims are not allowed to receive and pay interest, so a halal mortgage is without interest.
However, the mortgage is based on the principle of profit, according to Mohamad Sawwal, founder and CEO of Manzil, a Canadian financial institution that is Sharia-compliant.
According to Sawwal, one of the main benefits of halal mortgages is that they introduce a long-term fixed mortgage rate.
However, the downside is that the costs of halal mortgages are higher because lenders are unable to access low-cost capital.
