The Alberta government has introduced legislation that will enable provincially regulated banks to offer halal mortgage and home financing products.
Paying and receiving interest is prohibited in the Islamic faith, which means traditional interest-based mortgages aren’t an option for many Muslims in Canada.
A few private lending firms do currently offer alternative financing plans that don’t include interest payments, but these alternatives aren’t available through any of Canada’s larger banks.
Albert Finance Minister Nate Horner says the legislation enables credit unions and ATB Financial to offer halal mortgages, but the big banks won’t be required to do so.
Horner says he expects these financial institutions to develop their products in short order as the changes embodied in the legislation were sought by the industry.
There are a few different types of halal home financing, such as a program where a financial institution buys a home on behalf of a client and charges fixed monthly payments — including a profit margin — until the client’s home is paid off.
The end result of homeownership is the same, but the process and documentation are different compared with a regular mortgage.
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Anyone in Canada, Muslim or non-Muslim, can apply for a halal mortgage and most lenders require clients of halal financing to pay a minimum of 20 per cent of the market value, or purchase price, of the house, for their down payment.
— With files from Saba Aziz, Global News
© 2024 The Canadian Press
