The federal government is looking at making Islamic home financing increasingly accessible to help more Canadians break into the housing market.
As part of the 2024 federal budget that was released last week, Ottawa said it is “exploring new measures to expand access to alternative financing products, like halal mortgages.”
Last month, the federal government started consulting financial services providers and communities to understand how policies can better support the needs of all Canadians seeking home ownership, according to the budget.
“Canada is home to a vibrant and growing market of alternative financing products, including halal mortgages, that enable Muslim Canadians, and other diverse communities, to further participate in the housing market,” the budget states.
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Currently, none of Canada’s big six banks offer halal mortgages, which are an interest-free payment structure that follows Islamic principles.
However, some lenders in Canada have been offering halal mortgages for several years now.
“Halal mortgages are already offered to all Canadians by financial institutions,” Caroline Thériault, a spokesperson for the Department of Finance, said in an emailed statement to Global News Tuesday.
Thériault said halal mortgages are not government of Canada products.
“The government is simply looking at ways to help more Canadians become homeowners, while ensuring adequate consumer protections are in place.”
What is a halal mortgage?
A halal mortgage is a real estate financing method that complies with Islamic principles and teachings.
Under Sharia law, it is forbidden for Muslims to receive and pay interest, so a halal mortgage essentially takes interest out of the equation.
Instead, the mortgage is based on the principle of profit, said Mohamad Sawwaf, founder and CEO of Manzil, a Canadian financial institution that offers Sharia-compliant services.
Manzil has been offering halal mortgages that are both partnership- and profit-based since 2020.
“We look at this product as an innovation within the Canadian mortgage marketplace to allow for a segment of the population and the broader ethical community that may want to participate,” Sawwaf said in an interview with Global News Monday.
The end result of homeownership is the same, but the process and documentation are different compared with a regular mortgage, he said.
“Within the Islamic finance principles, you’re acquiring a real asset, it’s commodity-based, and then you are reselling it or partnering in that asset long-term, so that is the key difference here.”
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Victor Tran, a mortgage and real estate expert at Ratesdot.ca and broker with True North Mortgage, said a halal mortgage is almost like a traditional mortgage where the lender and the homeowner have shared ownership of the property, but there are extra steps involved.
He said the difference is that “instead of charging interest to the homeowner, the contract is structured in a way where there’s a fee charged.”
Even though halal mortgages are interest-free, it doesn’t mean the lending happens at a zero per cent charge, Sawwaf said.
“It just means that you’re not part of a transaction where money is being lent and you have to pay more money back,” Sawwaf said.
“That is the principle of usury within Islam and other Abrahamic faiths that we’re trying to avoid.”
Usury, which is the lending of money at exorbitant interest rates, is also prohibited in Judaism and Christianity.
Types of halal mortgages
Halal mortgages in Canada fall under three different types of agreements, called Ijara, Murabaha and Musharaka, according to Rates.ca.
Ijara is like a rent-to-own agreement in which the inhabitant of the home starts as a renter and becomes the owner upon final loan payment, Tran said.
Under this type of financing, the home is purchased by a trust, which then leases it to the customer.
The Murabaha is a cost-plus financing structure in which an Islamic financial company becomes the owner of a home and sells it to their client for a price that includes a profit rate, which is benchmarked against the Bank of Canada’s overnight lending rate, Tran explained.
The client enters into a purchase agreement that specifies fixed monthly payments for the duration of the contract, which is usually up to 15 years.
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Under the Musharaka arrangement, an Islamic financial company and its client become co-owners of a home, Tran said.
Throughout the mortgage term, which will follow the traditional mortgage term of up to 25 to 30 years, the financial company’s equity position decreases and the customer’s equity position increases proportionately as they pay out the owned balance.
At the end of the contract, the client will have 100 per cent home ownership and the company will have zero per cent, Sawwaf said.
Financial pros and cons of halal mortgages
From the financial standpoint, one of the main benefits of halal mortgages is that it introduces a long-term fixed mortgage rate, Sawwaf said.
For instance, under the Murabaha agreement, which follows the buy-and-sell structure, the mortgage can run up to 10 to 25 years.
Sawwaf said because the lender is sharing in the long-term risk, halal mortgages are “much more ethical and valuable at the end of the day” as opposed to having a debt-based system that is “not really good for society and its long-term social impact.”
However, the downside is that the costs of halal mortgages are higher because the lenders are not able to access low-cost capital, Sawwaf said.
“We’re hoping that the government signalling that they’re in support of halal mortgages with respect to potential legislation or policy changes, this could allow us to tap into institutional capital at the banks or other institutions,” he said.
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Tran said because the costs and fees are a little bit higher for a halal mortgage than a traditional mortgage, it may not be a financially feasible option for many.
Among the measures that Ottawa is exploring are changes in the tax treatment of halal mortgages or a new regulatory sandbox for financial service providers.
Who can apply for a halal mortgage?
Anyone in Canada, Muslim or non-Muslim, can apply for a halal mortgage, which is currently offered by a few financial institutions.
“Everyone is allowed to have a halal mortgage no different than you can go to any restaurant and eat a shawarma with halal chicken in it,” Sawwaf said.
“We don’t care what your background is, your religion, your creed, even if you’re non-religious or an atheist.”
As for the down payment, most lenders in Canada require clients of halal financing to pay a minimum of 20 per cent of the market value, or purchase price, of the house.
TORONTO – Singles star Leylah Fernandez and doubles specialist Gabriela Dabrowski will anchor Canada’s five-player lineup when the team tries to defend its Billie Jean King Cup title in mid-November.
The 26th-ranked Fernandez, the 2021 U.S. Open finalist from Laval, Que., is the lone Canadian in the top 100 of the WTA Tour’s singles rankings.
Dabrowski, from Ottawa, is ranked fourth on the doubles list. The 2023 U.S. Open women’s doubles champion won mixed doubles bronze with Felix Auger-Aliassime at the recent Paris Olympics.
Marina Stakusic of Mississauga, Ont., returns after a breakout performance last year, capped by her singles win in Canada’s 2-0 victory over Italy in the final. Vancouver’s Rebecca Marino is also back and Bianca Andreescu, the 2019 U.S. Open champion from Mississauga, Ont., returns to the squad for the first time since 2022.
“Winning the Billie Jean King Cup in 2023 was a dream come true for us, and not only that, but I feel like we made a statement to the world about the strength of this nation when it comes to tennis,” Canada captain Heidi El Tabakh said Monday in a release. “Once again, we have a very strong team this year with Bianca joining Leylah, Gaby, Rebecca and Marina, making it an extremely powerful team that is more than capable of going all the way.
“At the end of the day, our goal is to make Canada proud, and we’ll do our best to bring the same level of effort and excitement that we had in last year’s finals.”
Fernandez, who beat Jasmine Paolini to clinch Canada’s first-ever title at the competition, is ranked No. 42 in doubles.
Canada, which received an automatic berth as defending champion, will play the winner of the first-round tie between Great Britain and Germany on Nov. 17 at Malaga’s Martin Carpena Arena.
Australia, Italy and wild-card entry Czechia also received first-round byes. The tournament, which continues through Nov. 20, also includes host Spain, Slovakia, the United States, Poland, Japan and Romania.
Stakusic is up 27 spots to No. 128 in the latest world singles rankings. Marino is at No. 134 and Andreescu, the 2019 U.S. Open champion, is ranked 167th.
Canada will look to become the first team since Czechia in 2016 to successfully defend its Billie Jean King Cup title.
Malaga will also host the Nov. 19-24 Davis Cup Final 8. The Canadian men qualified over the weekend with a 2-1 victory over Great Britain in Manchester.
This report by The Canadian Press was first published Sept. 16, 2024.
VICTORIA – British Columbia Premier David Eby has announced his government has committed to earlier and enhanced pensions for wildland firefighters, saying the province owes them a “deep debt of gratitude” for their efforts in battling recent fire seasons.
Eby says in a statement the province and the BC General Employees’ Union have reached an agreement-in-principle to “enhance” pensions for firefighting personnel employed directly by the BC Wildfire Service.
It says the change will give wildland firefighters provisions like those in other public-safety careers such as ambulance paramedics and corrections workers.
The statement says wildfire personnel could receive their earliest pensions up to five years before regular members of the public service pension plan.
The province and the union are aiming to finalize the agreement early next year with changes taking effect in 2026, and while eligibility requirements are yet to be confirmed, the statement says the “majority” of workers at the BC Wildfire Service would qualify.
Union president Paul Finch says wildfire fighters “take immense risks and deserve fair compensation,” and the pension announcement marks a “major victory.”
“This change will help retain a stable, experienced workforce, ready to protect our communities when we need them most,” Finch says in the statement.
About 1,300 firefighters were employed directly by the wildfire service this year. B.C. has increased the service’s permanent full-time staff by 55 per cent since 2022.
About 350 firefighting personnel continue to battle more than 200 active blazes across the province, with 60 per cent of them now classified as under control.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – AtkinsRéalis Group Inc. says it has signed a deal with U.K. rail infrastructure owner Network Rail to help upgrade and digitize its signalling over the next 10 years.
Network Rail has launched a four-billlion pound program to upgrade signalling across its network over the coming decade.
The company says the modernization will bring greater reliability across the country through a mixture of traditional signalling and digital control.
AtkinsRéalis says it has secured two of the eight contracts awarded.
The Canadian company formerly known as SNC-Lavalin will work independently on conventional signalling contract.
AtkinsRéalis will also partner with Construcciones y Auxiliar de Ferrocarriles, S.A.(CAF) in a new joint venture on a digital signalling contract.
This report by The Canadian Press was first published Sept. 16, 2024.
