Canadians could be getting more options for financing one of life’s most daunting purchases.
What happened: The Alberta government tabled a new law that would allow more banks to offer halal mortgages — a financing product designed for Muslim Canadians who are prohibited from paying interest under Shariah law.
Catch-up: For a typical halal mortgage, the lender will calculate how much interest would be paid over the course of a traditional mortgage and charge that amount as an upfront fee.
- A handful of private lenders in Canada provide halal home financing plans that don’t include interest payments, but Canada’s largest lenders don’t currently offer them.
- Alberta’s finance minister says he expects new halal mortgage products to pop up quickly given that lenders in the province have advocated for the new law.
Why it matters: Halal mortgages aren’t limited to Muslim Canadians — anyone can buy a home with this model. While it’s not necessarily a money saver, avoiding fluctuating interest rates with a simpler, upfront payment structure could appeal to more Canadian buyers.
Zoom out: Ottawa announced in the 2024 budget that it’s working with financial institutions to expand halal financing options nationally, a project that the feds are expected to give an update on later this fall.—LA