Frequently Asked Questions
At EQRAZ, we understand that, for our customers, the decision to take only halal financing products is one of the most important ones in their lives. We wish to provide all stakeholders with 100% transparency and clarity. We believe that your questions, critique and challenges will only help us in making our products, services and offerings even better.
Therefore, we encourage our clients to not hold back, and to ask questions and raise concerns freely. All we request is that communications, discussions, comments and questions be respectful, sincere and in good faith – with the intention to help us improve.
At EQRAZ, we understand that, for our customers, the decision to take only halal financing products is one of the most important ones in their lives. We wish to provide all stakeholders with 100% transparency and clarity. We believe that your questions, critique and challenges will only help us in making our products, services and offerings even better.
Therefore, we encourage our clients to not hold back, and to ask questions and raise concerns freely. All we request is that communications, discussions, comments and questions be respectful, sincere and in good faith – with the intention to help us improve.
Halal mortgages are 100% Shariah-compliant as they comply with Islamic Shariah rules such as avoiding Riba (interest). They are structured according to underlying principles such as Ijarah, Musharaka or Murabaha.
EQRAZ's Shariah-compliant partner financier's halal mortgage is a monthly Murabaha product with renewable terms, allowing for flexibility. During the term, you have the option to close your mortgage by paying only the remaining balance of principal and prepayment charges, if applicable.
EQRAZ is available across all Canadian provinces, alhamdulillah.
You may apply here. you will be transferred to a third-party application portal to complete your application. After applying, you should hear back within five business days given the accuracy of information submitted.
Yes, our Shariah-compliant partner financiers are able to refinance your existing conventional or halal mortgage, and ask you to apply here.
Computershare is the largest custodian in Canada. Your home insurance is required by law and the beneficiary is the custodian. In the case of insurance claim, they will first pay off your mortgage balance and then forward the remaining funds to you.
Only for ready-to-move-in owner-occupied homes. This means the closing must be within 60 days and move-in ready.
If you accept the pre-approval letter, it is valid for 60 days and we charge a CAD 2500 non-refundable fee. If your pre-approval expires, you will need to pay a CAD 150 extension fee that will extend for another 60 days, totalling 120 days of validity.
Murabaha is a form of sale of an asset where the cost and markup/profit is known to both buyer and seller. The financing is structured as a monthly Murabaha, wherein the financier uses halal assets it owns, and sells them to the customer, who then sells them to the open market. This creates a 100% halal, -s-Shariah-compliant profit for EQRAZ payable by the customer. Initial financing is provided through an initial deferred Murabaha arrangement, in which – again – rather than using the home itself as the underlying asset – the financier uses a shariah-compliant commodity.
The financiers meet the condition for Shariah-compliance, where the asset being traded is a real tangible asset, not a fake paper asset. You can pay full price and receive delivery of the asset being traded.Note, we are Shariah-Compliant in accordance with AAOIFI standards.
Currently, our Shariah-compliant partner financiers are offering only a fixed Murabaha rate mortgage of up to a 5-year term and 25-year amortization.
See our Contact Us page here . We look forward to hearing from you!
Every month, your monthly mortgage payment covers:
a) A principal portion that builds your equity in the house
b) A Murabaha profit portion that incorporates the cost of financing for you
A full amortization schedule can be found here.
Yes, you are allowed to make prepayments (partial and full), so you are not stuck for the entire term of the mortgage. This way, you can upgrade homes, move or refinance your existing mortgage. The product is carefully designed with flexibility in mind. Please refer to the sample term sheet here for prepayment rules.
Effective rate includes all costs including the 2.0% commitment fee, solicitor fee and some other standard closing costs etc. It is standard practice to show total cost of financing as required by Canadian law.
The mortgage is calculated semi-annually as Canadian regulations require rates to be expressed as semi-annual compounded. This does NOT mean that your mortgage is compounded; rather – the mortgage is strictly structured as Shariah-compliant, however certain terminologies are used (as approved by the Shariah Board) to satisfy Canadian law and market practices.
Yes, any profit earned from the late payment charges will be donated to a charity of the financier’s choice. You may find the fee breakdown here: here.
Cancelling before end-of-term would be subject to penalties that are calculated based on standard Canadian rules i.e., higher of (a) three months of profit and (b) profit rate differential, which can be calculated here. This has also been mentioned in term sheet here.
The second lawyer fee is not a financier requirement. Only Ontario (ON) and British Columbia (BC) mandate the use of two lawyers for private mortgages.
Globally, all Islamic banks and financial institutions advertise and offer their products based on a percentage rate. This allows clients to make an apples-to-apples comparison between the cost of halal financing and that of conventional products.
A percentage rate simply informs you how much the financing will cost you in proportion to your halal home financing amount, and does not indicate that there is any interest involved.
In Canada, as in all western countries, halal financing is more expensive because Islamic financial institutions (“IFIs”) do not have access to low-cost funds available from the well-established interest-bearing financial markets. IFIs have to obtain halal funding from limited sources, which is more expensive than conventional interest-bearing funding. As halal financing grows in Canada, we expect that the costs will reduce, as they have generally done so in countries with mature Islamic Finance industries.
As the legal and beneficial owner of the property, you will keep all the profits from property price increases. Similarly, in the event of a property price reduction, you will also absorb the loss.
Yes. You can partially or fully prepay the financing amount due at any time throughout the financing period. However, prepayment charges will apply.
EQRAZ has appointed a Shariah Board and has received a fatwa from Mufti Mirza Zain Baig of CCIRI, Montreal as well as Mufti Faisal Al Mahmoudi of Dar-al-Mahmoudiyya, Edmonton. The Shariah structures of the funding provider are reviewed and certified by these scholars. Shariah-compliance is audited on an annual as well as adhoc basis and Shariah Certificate renewed accordingly. All financing documents, systems and processes of the parties involved are Shariah-certified. All our scholars' contact details are available on our website should you wish to contact them. Furthermore, we funding providers are compliant with (and where applicable, members of) AAOIFI.
The financier ensures a Riba-free relationship through a Wakala Agreement signed with a Canadian Schedule One bank, hence not borrowing from the bank on interest. Instead, the financier is taking funds as “Wakeel” and investing them in halal Murabaha mortgages. This is all Shariah-certified and AAOIFI-compliant. The Shariah certificate* includes the Wakala agreement (known formally as “Master Financing and Servicing Agreement”) and can be viewed here. For further information, please see our SRB address this in Q7 here.
All Islamic banks in the world deal with conventional banks. If you wish to avoid Riba, than ideally you must stop living in Canada as the hydro you consume, the house you live in, the car you drive, the food you eat from most restaurants, the groceries you buy, the schools you send your children to, the wifi and computer or phone you are using to read this message have been manufactured with Riba. For further information, please see our SRB address this in Q8 here.
With respect to those scholars, I would humbly remind: (a) Al-Quran 2:286: Allah does not burden a soul that it can bear, and (b) Al-Quran: 2:185: Allah intends for you ease and does not intend for your hardship. (c) The Holy Prophet saww said: “Facilitate Religious matters to people and do not make things difficult. Obey each other and do not differ amongst yourselves” (Al-Bukhari, 69). So with respect, EQRAZ is not touching Riba from either its funding from the bank (which is Wakala and halal), or with its customers (which is Murabaha). If that is not sufficient to please Allah, then may Allah forgive us all, Ameen.
Finally, it is our intention to not only facilitate halal home-ownership, but also to do our best to route the interest-free customer deposits received by Canadian banks from being used in interest-bearing products towards halal financing products. In doing this, more wealth is brought to the Islamic finance world, hence strengthening our communities and making halal financing more accessible. NONE of this wealth is from interest-based profits, but from customer deposits.
You will be required to sign two agreements as follows:
- The Murabaha Agreement
- The Legal Mortgage Charge
You will NOT be required to sign any agreements with other parties. All the above documents are 100% compliant with both Shariah (and AAOIFI) as well as Canadian law.
To comply with provincial licensing requirements, EQRAZ cannot be the financier. Rather, EQRAZ’s role is to ensure end-to-end Shariah-compliance of your halal mortgage. Your mortgage agreement will be with one of EQRAZ’s wholly-owned subsidiaries e.g., “EFV001 Inc.” where EFV stands for EQRAZ Funding Vehicle. This ensures that your mortgage is both halal and complies with Canadian provincial and federal regulations. You will NOT be required to sign any agreements with other third parties.
Wakala refers to an agreement where a principal (or Muwakkil) authorizes or appoints an agent (or wakeel) to do a well-defined legal action on his or her behalf. However, the wakeel is under a duty of care and skill to act diligently when performing his obligations. The financier receives funding based on this agreement with Canadian-based investors and banks.
While you have the right to use a lawyer of your choice, we believe that working with a lawyer we recommend, who is already familiar with our partner financier's documentation and procedures, will save you on legal fees and expenses and likely make the closing process faster and easier. If you wish to use your own lawyer who is not part of our panel, we are happy to include them for a one-time fee of CAD 5,000, which includes referral and other fees. Your lawyer can pay these fees or ask you to cover them. That is a conversation that between you and your lawyer, without any other party being involved in that decision. You can find the list of recommended lawyers here, under "Recommended Closing Lawyers".
Yes, you will need your own lawyer to work with the financier’s closing lawyer to advise you. EQRAZ can recommend from our panel of lawyers already well-versed with the product documentation. However, you are free to choose your own lawyer if you so prefer.
The financier has a robust contingency plan in place and does not expect any insolvency. They are backed by CMLS Financial, one of Canada’s largest and strongest third-party mortgage administrators. Your home and Shariah-compliant mortgage are in safe hands in the unlikely event that the financier ceases to operate or exist.
If you default on your mortgage payments, the financier will work with you to find a mutual solution. However, ultimately, if the problem remains unresolved, then the financier will need to call your mortgage, sell the property, recover investors’ funds, and give any remaining balance to you. It is very important that you work with your family and financial advisors to ensure that your personal cash-flows are sufficient to cover your monthly mortgage payments.
You may sell the property to a third party at any price you are willing to take. However, you will have to settle your outstanding dues, including applicable fees and charges, to the financier out-of-pocket before the property’s title can be transferred to the buyer and the property sale can be concluded.