TORONTO: The Canadian government has unveiled plans to introduce halal mortgages for Muslims, aiming to broaden access to alternative financing and support the dream of homeownership.
This initiative seeks to meet the unique requirements of the Muslim community while enhancing diversity in the housing market.
As part of its annual budget, the government will implement a two-year ban on foreign land purchases in the country. This move underscores the government’s dedication to offering alternative financial products, as outlined in the 2024 federal budget.
Included in the budget is the introduction of halal mortgages, designed to enable Muslim Canadians and other diverse groups to participate more actively in the housing market. The government plans to engage with financial institutions and communities to enhance federal policies in response to Canadians’ housing needs.
Consultations, which began in March 2024, will explore potential changes to tax treatments for these products and establish a regulatory sandbox for financial service providers.
The government aims to strike a balance between expanding access to alternative financing and ensuring robust consumer protections.
Halal mortgages typically incur higher costs compared to traditional interest-based loans. Currently, major Canadian banks do not offer halal mortgages, leaving many Muslims dependent on smaller firms for investment and homeownership opportunities.
The Liberal government intends to address this gap by examining ways to broaden mortgage policies to include alternative financing options. Detailed plans are expected to be announced in the fall.
Halal Mortgages adhere to Sharia principles and offer payment structures that exclude interest. There are three common types:
- Ijara operates on a rent-to-own model, where a bank purchases the asset and leases it back to the customer. Payments contribute to both the capital and the financial institution’s profit.
- Musharaka involves a partnership between the financier and the customer, with both parties owning the property until equity is gradually transferred.
- Murabaha employs a credit system where ownership is immediately sold to the customer. Profits are incorporated into the final offer, considering factors such as the buyer’s credit history, deposit, and agreement terms.
I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.
