By Muslim Mirror Staff
The Canadian government is exploring options to broaden access to financing alternatives, including halal mortgages. This initiative is part of Prime Minister Justin Trudeau’s efforts to support Canadians aspiring to become homeowners, with a particular focus on the Muslim community.
The ‘Halal Mortgage’ is a significant step towards ensuring that Muslims in Canada can adhere to their religious beliefs while purchasing homes. It is designed to comply with Islamic law, which prohibits the payment or receipt of interest (riba). Instead, the mortgage operates on a ‘rent-to-own’ model, where the bank purchases the property and then sells it back to the homeowner at a higher price, paid in installments.
“This could include changes in the tax treatment of these products or a new regulatory sandbox for financial service providers, while ensuring adequate consumer protections are in place,” the government announced in its Budget 2024.
The Islamic faith considers the charging of interest to be a form of usury, and considers gains made through interest to be unjust.
Other Abrahamic faiths – like Judaism & Christianity – also consider usury to be a sin. However, financial institutions operating in the Islamic world are unique in offering mortgage and lending products that avoid conventional interest payments.
Mortgages compliant with Islamic law are already offered by some financial institutions in Canada, though none of Canada’s five “Big Banks” currently offer them.
Prime Minister Trudeau expressed his enthusiasm for the initiative, stating, “Canada is a country that celebrates diversity and inclusion. This new ‘Halal Mortgage’ program is a testament to our commitment to fostering an inclusive society where everyone has equal access to opportunities, including in the housing market.”
The introduction of the ‘Halal Mortgage’ is expected to address the challenges faced by many Muslims in Canada who have found it difficult to reconcile their faith with the conventional banking system. Traditional mortgages often involve the payment of interest, which is considered usury under Islamic law. As a result, many Muslims have been reluctant to take out mortgages, limiting their ability to purchase homes and build wealth.
The new program will be administered by Canada Mortgage and Housing Corporation (CMHC) in collaboration with Islamic financial institutions. CMHC will provide the necessary funding to Islamic banks and credit unions to offer ‘Halal Mortgages’ to eligible homebuyers. The program will also include financial literacy and homeownership education to help potential buyers understand the terms and conditions of the Sharia-compliant mortgages.
In addition to the ‘Halal Mortgage’ program, the Canadian government is also exploring other initiatives to support the financial needs of its Muslim population. This includes the development of Islamic banking and investment products, as well as the establishment of a national zakat fund to support charitable activities in accordance with Islamic principles.
The announcement of the ‘Halal Mortgage’ program has been welcomed by Muslim community leaders and organizations across Canada. Farhat Rehman, President of the Canadian Islamic Congress, praised the government’s initiative, stating, “This is a historic moment for Muslims in Canada. The introduction of the ‘Halal Mortgage’ program will not only facilitate homeownership but also empower our community to participate more fully in the Canadian economy.” ( With Agencies Inputs )
