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Exploring Halal Mortgages: A Path to Homeownership Aligned with Islamic Principles
M. Wajahat Faizan
April 26, 2024
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The Government of Canada recently announced its intention to explore the concept of offering Halal/Islamic Mortgages as part of its budgetary plans. In this article, we delve into the details of this concept and interpret the mechanisms through which this notion could be made available, aiming to provide clarity, and understanding for our readers.
In the realm of real estate financing, the concept of Halal mortgages has emerged as a compelling alternative for individuals seeking to honor their Islamic beliefs while securing homeownership. Embedded in the principles of Sharia law, Halal mortgages scrap the payment of interest (rib’aa), offering a solution that resonates with the religious beliefs of many. The absence of interest, as mandated by Sharia law, ensures that these financing solutions align with the ethical principles of Islam.
In Canada, privately offered Halal mortgages are offered through the following vehicles, designed to adhere to Islamic principles while facilitating the purchase of property:
These diverse modalities offer viable pathways for individuals seeking to fulfill their homeownership aspirations while remaining faithful to their Islamic beliefs. One of the key advantages of Halal mortgages lies in the provision of long-term fixed mortgage rates. With durations extending up to 25 years, borrowers benefit from stability and predictability in their financial commitments. A buy-and-sell structure, combined with lenders' willingness to share in long-term risks, enhances the appeal of Halal mortgages among prospective homeowners.
However, it is essential to acknowledge the cost implications associated with Halal mortgages. Due to constraints on accessing low-cost capital, borrowers may encounter higher overall costs and fees compared to traditional mortgage options. While Halal mortgages offer a compelling avenue for advocates seeking financial products aligned with Islamic beliefs, the elevated costs may render this option financially impractical for some individuals.
In conclusion, Halal mortgages represent a significant stride towards accommodating the diverse needs of individuals within the Islamic community. By providing financing solutions that uphold Islamic principles while facilitating homeownership, Halal mortgages serve as a testament to the compatibility of religious beliefs with contemporary financial practices.
The lawyers at Kormans LLP are here to assist you with any questions that you may have regarding what we discussed in this blog, or any other matter where we can be of assistance. Please feel free to reach out to our office at (905) 270-6660 or by email at info@kormans.ca.
Faizan’s academic background includes a Juris Doctor (J.D.), an LL.M. from Aberdeen Business School in Scotland, and an LL.B. (Hons.) from the University of London. He has also earned certifications in Construction Law and Public Policy from the prestigious Osgoode Hall Law School, showcasing his diverse expertise across multiple areas of law. After being called to the Ontario Bar in 2020, he gained experience in real estate, commercial, and immigration law at a boutique firm before joining Kormans LLP.
Specializing in a wide range of legal services, Faizan focuses on residential and commercial real estate transactions, financing, wills and estate planning, and contractual matters. His expertise also extends to Islamic wills and Sharia-compliant financing, where he offers culturally sensitive solutions tailored to the needs of diverse clients.
Faizan’s thought leadership is evident in his published articles on Islamic wills and Halal mortgages, which can be found on the Kormans website. His expertise extends beyond Islamic wills, with a deep understanding of real estate law showcased through writings on topics such as Tarion warranties, joint tenancy, and easements. These works highlight his broad knowledge of property law and commitment to providing clients with clear, informed guidance.
In addition to his contributions to real estate law, Faizan has made significant strides in immigration law. His representation before the board in the landmark case of Vilcassim v. Canada helped establish a crucial precedent in children’s rights within Canadian immigration law.
With a strong background in law, Faizan continues to teach as one of the pioneering professors in the Graduate Diploma in Immigration and Citizenship Law program at the prestigious Queen’s University, where he shares his practical experience and knowledge with future professionals.
His contributions to the legal field were recognized with the Queen Elizabeth II Platinum Jubilee Award Pin, honoring his dedication and service to immigration law. He is also the recipient of the King Charles III Coronation Medal, a prestigious award recognizing contributions to community and public service. This recognition was granted through a rigorous selection process led by the Mississauga Streetsville Community Leadership Association and the Canadian Heraldic Authority at the Chancellery of Honours, Rideau Hall.
Outside of his professional life, he enjoys travelling, has a passion for cricket, plays weekend squash and frequently participates in youth mentorship programs.
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