Navigating Halal Home Financing: Your Questions Answered
As we work toward making Halal home ownership accessible to all Canadians, we know that the "how" is just as important as the "where." Here is a deep dive into some frequently asked questions.
1. What is the source of the funding?
Transparency is a pillar of Islamic finance. The money used to finance homes comes directly from the Manzil Mortgage Fund (MMF).
Unlike conventional banks that may rely on interest-bearing loans or credit lines, our fund is a Shariah-compliant investment vehicle. It allows private investors to put their capital into a pool that strictly finances residential real estate using Murabaha (cost-plus) and Musharaka (partnership) structures. This creates a "community-funded" cycle where investors earn a Halal return, and home buyers get the financing they need.
2. Who owns the home during the financing period?
This depends on the specific product, but at Manzil, we primarily use the Musharaka (Partnership) model.
Joint Ownership: You and Manzil enter into a co-ownership agreement. You aren't "borrowing" money to buy a house; rather, you and Manzil are buying the house together.
The Shift: Your "down payment" represents your initial equity (ownership share). Each month, as you make payments, you are buying back "units" or shares of the home from Manzil.
Full Ownership: You hold the title and live in the home as the primary resident. Once the final payment is made at the end of the term, Manzil’s share becomes zero, and you become the sole owner.
3. Is there a "mark-up" on the house price?
In a Murabaha (cost-plus) arrangement, there is a transparent, agreed-upon profit margin added to the purchase price. In our Musharaka (partnership) model, we don't necessarily "mark up" the initial price. Instead, the cost of financing is captured through a profit rate.
This rate is not interest; it is the "rent" or "profit" paid to Manzil for the portion of the home you do not yet own. This rate is fixed for your chosen term (e.g., 5 years) and is based on the expected returns for the investors in the Manzil Mortgage Fund.
4. Are there payments required other than "rent"?
When you finance with Manzil, your monthly payment consists of two parts:
Acquisition: The portion used to buy more equity (shares) from Manzil.
Profit/Rent: The fee paid to Manzil for using their share of the property.
Beyond these, there are standard costs associated with any home purchase, such as a one-time administrative fee (typically 2% of the financing amount) due at closing, and standard closing costs (legal fees, land transfer taxes, etc.).
5. What about Quebec?
We know the community in Quebec is eager for Halal options. Currently, our primary operations are focused on Ontario, Alberta, and British Columbia. However, we are actively working on the regulatory and legal frameworks required to fully service the Quebec market.
Have more questions? Visit our Help Center for detailed guides on Shariah compliance, eligibility, and more.
As we work toward making Halal home ownership accessible to all Canadians, we know that the "how" is just as important as the "where." Here is a deep dive into some frequently asked questions.
1. What is the source of the funding?
Transparency is a pillar of Islamic finance. The money used to finance homes comes directly from the Manzil Mortgage Fund (MMF).
Unlike conventional banks that may rely on interest-bearing loans or credit lines, our fund is a Shariah-compliant investment vehicle. It allows private investors to put their capital into a pool that strictly finances residential real estate using Murabaha (cost-plus) and Musharaka (partnership) structures. This creates a "community-funded" cycle where investors earn a Halal return, and home buyers get the financing they need.
2. Who owns the home during the financing period?
This depends on the specific product, but at Manzil, we primarily use the Musharaka (Partnership) model.
Joint Ownership: You and Manzil enter into a co-ownership agreement. You aren't "borrowing" money to buy a house; rather, you and Manzil are buying the house together.
The Shift: Your "down payment" represents your initial equity (ownership share). Each month, as you make payments, you are buying back "units" or shares of the home from Manzil.
Full Ownership: You hold the title and live in the home as the primary resident. Once the final payment is made at the end of the term, Manzil’s share becomes zero, and you become the sole owner.
3. Is there a "mark-up" on the house price?
In a Murabaha (cost-plus) arrangement, there is a transparent, agreed-upon profit margin added to the purchase price. In our Musharaka (partnership) model, we don't necessarily "mark up" the initial price. Instead, the cost of financing is captured through a profit rate.
This rate is not interest; it is the "rent" or "profit" paid to Manzil for the portion of the home you do not yet own. This rate is fixed for your chosen term (e.g., 5 years) and is based on the expected returns for the investors in the Manzil Mortgage Fund.
4. Are there payments required other than "rent"?
When you finance with Manzil, your monthly payment consists of two parts:
Acquisition: The portion used to buy more equity (shares) from Manzil.
Profit/Rent: The fee paid to Manzil for using their share of the property.
Beyond these, there are standard costs associated with any home purchase, such as a one-time administrative fee (typically 2% of the financing amount) due at closing, and standard closing costs (legal fees, land transfer taxes, etc.).
5. What about Quebec?
We know the community in Quebec is eager for Halal options. Currently, our primary operations are focused on Ontario, Alberta, and British Columbia. However, we are actively working on the regulatory and legal frameworks required to fully service the Quebec market.
Have more questions? Visit our Help Center for detailed guides on Shariah compliance, eligibility, and more.
