Mortgage Blog
Everything about Halal Mortgage
November 14, 2024 | Posted by: Sarabjit Dhuna
Halal Mortgage is also known as no interest-based Mortgage. It is Sharia (Islamic)-compliant lending product that use to buy home that avoid interest-based charges.
As per Islamic law, charging interest is illegal practice in Islamic law. Halal Mortgage are new in Canada but, In USA and UK, Halal mortgage has been practicing since 2000s. Growth of Halal Mortgage is slow due to regulatory and government laws.
Halal Mortgage in Canada is seeing growth since last few years. Recent comments of Federal government can suggest that with implementation of legal and regulatory law can help lenders to offer this Halal Mortgage in their portfolio and encourage competition. Without, it will be expensive for Muslim’s home buyer.
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Even its No interest-based Mortgage it is still costing the borrower around 4% more.
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As this type of mortgage falls in uninsured mortgage so, you have to make larger down payment which is around 20%.
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This type of mortgage involves more risk for lenders as there are no financial regulation and tax laws.
Benefits of Halal Mortgage: -
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Allow Muslim Buyers to own their dream home
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You don't have to pay interest compared to another mortgage
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Predictable payment can help borrower for budgeting.
Drawbacks of Halal Mortgage: -
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Limited availability because only few lenders offer Halal Mortgage
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It is more costly than general mortgage interest rate.
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It is considered uninsured mortgage so, borrower has to pay 20% down Payment.
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