A solution to finance your home while respecting your Muslim faith in Alberta

Published on World Today News
https://www.world-today-news.com/a-solution-to-finance-your-home-while-respecting-your-muslim-faith-in-alberta/
February 19, 2022

Photo : Radio-Canada / Jordan Mesiatowsky

Blanca Lima, an Edmontonian of Muslim faith, has long believed that it would be impossible for her to become a landowner without violating her principles.

Since you can’t pay interest, you can’t have a mortgage with a bank to begin with. It would therefore be necessary to have enough savings to pay in cash. [….] No one has that much cashshe explains.

That’s why she and other members of Al-Rashid Mosque worked for two years to develop a new Islamic finance organization in Alberta.

The Canadian Halal Financial Corporation took shape towards the end of 2021. It is led by Thomas A. Lukaszuk, who among other things served as Minister of Employment and Immigration under Ed Stelmach, and lawyer John Stainton.

All operations and contracts of this new financial institution are reviewed and certified by a committee of experts in Koranic law from the Al-Rashid Mosque.

Fees are charged rather than interest and alternative solutions are offered in the event of default. (archives)

Photo : Radio-Canada / Jordan Mesiatowsky

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No interests or third-party institutions in contracts

Imam Mahmoud Omar explains that in the Islamic faith, contracts should be between partners, sellers and buyers, and not involve third parties.

You can’t just say “I’m going to lend you money and I’m going to get richer. You do what you want with it, but you give it back to me with interest”. Islam forbids this and instead promotes a sense of community and partnership.

Islamic mortgages, commonly offered in the Middle East but by only a few financial institutions in Canada, are not calculated based on an interest rate.

Instead, they usually contain fixed monthly fees, spread over years. Only the client owns the house and the only other party involved in the financing contract is the corporation.

When a customer is in default with a traditional bank, explains Thomas A.Lukaszuk, the bank takes possession of the house and resells it. She’ll pay your debt, and if there’s ever anything left for you, great. We can’t do this.

Thus, the Canadian Halal Financing Corporation instead begins by arranging a meeting with the owner and an imam of Al-Rashid to find a solution. Then she allows the client to sell his house himself. If that does not work, finally, she can take legal action.

But there are several of these steps intertwined in the process to protect the customer and create a spirit of partnership and not a relationship of lenders and borrowers.says Thomas A. Luszuk.

Halal financing is a little more expensive than a traditional mortgage, it’s true. However in the contract you have many more advantagesJudge Imam Mahmoud Omar.

As an example, the company states on its website that a $100,000 home could be financed with monthly payments of $637.43 for 25 years.

Since December, the new financial institution has received more than 200 financing requests from across Canada. At this time, it is only accepting applications from Alberta.

With information from Katrine Deniset