A Halal Mortgage Option in Canada: What to Know

How does a Halal mortgage work in Canada?

Halal finance companies, such as Manzil, are helping modernize and diversify Canada's mortgage landscape by filling a gap in the market for home buyers seeking a non-interest alternative.

A Halal mortgage avoids riba through Shariah-compliant financial structures that generate profit as a sales or investment return, aligning the real estate transaction with Islamic finance principles.

Halal finance structures include:

• Joint venture partnerships – Musharaka (the most widely used, and offered by Manzil)
• Cost-plus markup sales – Murabaha
• Lease-to-own agreements – Ijara

These models are legally structured and designed to be just as sound as traditional mortgages — with their own regulatory guardrails (check with individual providers for the fine print).

Co-own your home — to one day fully own it.

“We can’t currently offer Halal mortgages through our brokerage — but I’m very pleased to be able to refer clients to a partner we trust, like Manzil, who does.” 

– Dan Eisner, True North Founder and CEO

Manzil offers a declining balance co-ownership model, a form of Musharaka, which means 'partnership.'

This partnership involves both you and the provider 'buying' the property (or the amount still owed for the property) together through a legal joint venture. Each side has an ownership stake that reflects the amount of equity contributed to the purchase.

The down payment you provide establishes your ownership share, while Manzil contributes the remainder. With each monthly payment, you gradually acquire a greater share of ownership in the home, offering a straightforward and steady path to full ownership.

How do Halal mortgage payments work?

Under Manzil's Musharaka (co-ownership) model, you can choose a fixed term length of 2, 3, 4 or 5 years — your payments are fixed for the term.

As you make your payments, your equity increases each month, while the provider's decreases.

Your fixed payment amount combines two aspects:

• One part of the payment is used to buy back a portion of Manzil's share
• The remainder of the payment is the profit charge on the share that Manzil still owns

At the end of the mortgage amortization (partnership timeline) when you pay out the agreement, you hold 100% of the home and become the sole owner. (Congrats!)

Use Manzil’s online calculator to get a sense of your monthly payments based on their current profit rate.

How is the profit rate calculated?

Since interest isn’t part of the deal, Halal mortgage providers (like any business) still need to make a return — and do it in a way that fits their clients' needs.

Manzil uses a pre-agreed profit rate to calculate the cost of their share in the home over time. It's not an interest rate, but the price of a shared asset, sold back to you in chunks, with the profit baked into each payment.

The profit rate is fixed for the length of your term. When your term ends, you can renew at a new rate that reflects current investor return expectations and broader economic conditions.

✴️  You can view Manzil's current profit rates on their website: Manzil Rates Page

Who's eligible for this Halal mortgage, and where is it available?

Manzil's Halal Home Financing Program is designed to be transparent and accessible.

Here are some of their criteria:

• New purchase, transfer, or refinance
• Property must be residential and owner-occupied
• Minimum 20% down payment required
• Maximum financing available is $1.5 million
• Fixed terms available (2, 3, 4, and 5-year)
• Up to 25-year amortization
• A one-time admin fee of 2% (of the financing amount) is due at closing
• Currently available in major centres in Ontario, Alberta, and British Columbia

Manzil is working on adding provinces for its product access, including Saskatchewan, Manitoba, Quebec, Nova Scotia, and PEI.

✴️  Ready to take the first step? You can submit a no-obligation pre-application with Manzil. They won't run a credit check unless you give the go-ahead — no pressure, no surprises.

Canada is a mosaic — of homeowners and mortgage alternatives.

Over 19 years ago, True North Mortgage was one of the original disruptors in the big bank mortgage space, obsessed with providing Canadians with better rates and mortgages.

Canada’s mortgage market is more diverse than ever, offering a range of traditional and alternative solutions. Manzil is one of those fine-tuned options — helping clients access a homeownership path that fits their unique needs and financial goals.