Shariah-compliant mortgages and other types of Islamic financing would be legal in Canada, but the CMHC has no plans to insure them or change any legislation or administrative practices to accommodate them, concluded a report.
"Islamic financial products should not present any particular difficulties under Canadian accounting standards," said a study conducted by the CMHC that noted the growing demand for these types of loans.
Based on a principle forbidding the charge of interest on loans, a Shariah-compliant mortgage would position the lender and the purchaser together as equity partners in a home. A monthly rent is paid with principal to the lender that is "putting up the rest of the purchase price," explained a report from the Canadian Press.
This type of arrangement creates some obstacle for lenders, concluded the CMHC report, suggesting that private entities are free to pursue this type of financing for the approximately 700,000 Canadian Muslims that could be interested.