Muslims dwelling in Canada now have entry to interest-free mortgages, which can allow them to purchase properties, a report stated on Wednesday.
Islamic mortgages are vital as a result of curiosity expenses are forbidden for Muslims.
“We cannot deal with conventional banks even if the interest is very low, even if it is 0.1 percent,” Abdullah Mohiuddin advised the Canadian Broadcasting Corporation (CBC).
A number of corporations noticed a chance and are actually providing halal, or permissible, mortgages, however it isn’t free cash — there are carrying prices constructed into the loans.
“People who avail of Islamic mortgages still pay a comparable amount that you would pay if you got a conventional mortgage. It’s just that the structure of these mortgages are different,” stated Walid Hejazi, an professional in Islamic finance on the University of Toronto.
A well-liked possibility that conforms to the Muslim religion and Canadian legislation is a rent-to-own construction, the place the mortgage firm can be an proprietor of the property. Another is to create a authorized framework the place charges, slightly than curiosity funds, are charged with out violating Islamic rules.
Zuhair Naqvi began Eqraz, a Toronto-area Islamic mortgage firm. He is seeing a excessive demand. However, prices are greater than conventional mortgages for a number of causes. Since the market is comparatively new, discovering funds to lend out for halal mortgages is troublesome, he stated. Apart from that, administrative prices are greater as a result of demand is smaller and Islam restricts foreclosing on a mortgage, which irritate monetary dangers.
Naqvi stated that provides as much as a further 4% on prime of what common lenders just like the Royal Bank would cost.
“Despite this, while the market is relatively small, it is sizable. Statistics Canada reported 1.8 million Muslims live in Canada as of 2021, and slightly more than half rent rather than own. That, coupled with lenders becoming more aware of halal mortgages, means costs will do down in the future,” stated Naqvi.
