The Trudeau government has introduced "halal mortgages." Here is an explanation of what they entail.

The 2024 federal budget in Canada outlines plans to introduce "halal mortgages" aimed at enabling Muslim Canadians and other diverse communities to participate more fully in the housing market. These alternative financing products, which adhere to Sharia principles by avoiding interest charges, are intended to expand access to home ownership for communities that may face barriers with traditional mortgage options.

Halal mortgages utilize payment structures like ijara (rent-to-own), Musharaka (partnership-based), and Murabaha (credit-based with immediate ownership transfer), which do not involve interest and are compliant with Islamic law.

The government is exploring measures such as changes to tax treatment or new regulatory frameworks to facilitate the availability of halal mortgages. Consultations with financial service providers and diverse communities have begun, with plans for a detailed announcement on this initiative expected in the fall.

These halal mortgage options are perceived as more complex and potentially more expensive due to their risk profile. Currently, major Canadian banks do not offer halal mortgages, leaving many Muslims seeking homeownership reliant on smaller firms for financing solutions. The government's aim is to address this gap and provide inclusive housing finance options for diverse communities.