The Canadian government, under the leadership of Prime Minister Justin Trudeau, is actively considering the introduction of ‘halal mortgages’ to cater to the financial needs of the Muslim community in the country. This initiative comes as part of a broader plan to make homeownership more accessible and inclusive.
Sharia, the Islamic law, prohibits Muslims from engaging in transactions involving interest, deeming them exploitative and unethical. In response to this, the government is exploring the implementation of alternative financing products, such as halal mortgages, to offer a Sharia-compliant solution to home financing.
Within this framework, Ottawa has initiated consultations with various financial service providers to explore viable options that align with the principles of Sharia. The government aims to create a regulatory environment that supports diverse communities, including the Muslim population, in accessing the housing market.
One of the key components of halal mortgages is the avoidance of interest-based transactions. Instead, these mortgages utilize different payment structures, such as Musharaka, Murabaha, and Ijara, to ensure compliance with Sharia principles. These models involve forms of equity participation and profit sharing between the financial institution and the homebuyer.
The Liberal government‘s plan includes potentially changing the tax treatment of these alternative financing products to encourage their adoption within the financial industry. By leveraging a regulatory sandbox for financial service providers, the government aims to facilitate the development and implementation of halal mortgage options.
Canada‘s mainstream banks currently do not offer halal mortgages, leading to a gap in the market for Sharia-compliant financing. With the government’s ongoing consultations and commitment to providing further details on the initiative in the coming autumn, the prospect of halal mortgages becoming a reality in Canada is gaining momentum.
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