Frequently Asked Questions

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.

What is a ‘Halal’ mortgage?

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 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 principle and prepayment charges, if applicable.

Which provinces is EQRAZ available in?

We are actively funding all provinces except for QC and Atlantic provinces. We are working to become available nationwide by Q4 2023, InshaAllah.

How do I apply for an EQRAZ mortgage?

You may apply here. The application process will include an initial screening to ensure you qualify for an EQRAZ Mortgage. If you do, you will be transferred to our third-party application portal to complete your application. After applying, you should hear back within five business days given the accuracy of information submitted.

Can I transfer/switch my existing mortgage over to EQRAZ?

Yes, we are able to refinance your existing conventional or halal mortgage, and ask you to apply here.

What is the amortization period and available terms?

25 years.

We offer mortgages up to a five-year renewable term, each at it’s respective rate found here. Please see term sheet here.

Why is the home insurance payable to Computershare Trust Company Canada?

Computershare is the largest custodian in Canada. Your home insurance is required by law and beneficiary is the custodian. In case of insurance claim, they will first pay off your mortgage balance then forward remaining funds to you.

Is the mortgage available for newly constructed houses?

Only for ready-to-move-in owner-occupied homes. This means the closing must be within 60 days and move-in ready.

If I apply and get pre-approved, but I decide that I would like to wait another six months to a year, does that affect my ability to reapply?

If you accept our pre-approval letter, it is valid for 60 days and we charge a CAD 250 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.

What is a ‘Murabaha’?

Murabaha is a form of sale of an asset where the cost and markup/profit is known to both buyer and seller. EQRAZ is structured as a monthly Murabaha, wherein we use halal assets that we own, and sell them to the customer, who then sells them to the open market. This creates a 100% halal, 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 – we use a shariah-compliant commodity.

EQRAZ meets 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.

Do you offer a variable ‘Murabaha’?

Currently, we are offering only a fixed Murabaha rate mortgage of up to five years term and 25 years amortization.

Are you able to provide a copy of the Master Murabaha Agreement that we will sign?

Please note we do not share our standard contract with the general public due to confidentiality purposes. For your verification, you may view Shariah certificate here. Please further note that you will have an opportunity to review our Master Murabaha Agreement prior to signing it.

If you wish to have your preferred Shariah scholar to review our documents, we are happy to share them subject to NDA. Alternatively, we can forward any of your queries to our Shariah Board to get you an answer. However, before you proceed, please watch these short videos from our Shariah board here.

What is the fastest way to reach your team?

See contact us page here. We look forward to hearing from you!

How do monthly payments work?

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.

Can I make prepayments?

Yes, we allow 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. Our product is carefully designed with flexibility in mind. Please refer to our term sheet here for prepayment rules.

Why is the effective APR higher than the posted profit rate?

Effective rate includes all costs including the 1.5% 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.

Why is the mortgage calculated semi-annually instead of annually?

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, we use certain terminologies (as approved by our Shariah Board) to satisfy Canadian law and market practices.

Will I incur late-payment fees in case of delayed payments? And is that halal?

Yes, as we must cover late payment charges from our financer. Keep in mind, any profit earned from the late payment charges will be donated to a charity of our choice. Please see servicing fees here.

Note, Canadian regulations require a standard early payment penalty on mortgages, to avoid volatility in the market. EQRAZ ensures (per Shariah board instructions) that this is halal by charging early payment applicable fees through a Murabaha transaction. Without this early payment fee built in, EQRAZ (or any other halal company) would not be able to receive financing at scale from Canadian institutions therefore we follow recommendations to ensure scalability.

What are the penalties if I cancel?

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.

Can the second lawyer fee be waived?

The second lawyer fee is not our requirement. Only ON and BC mandate the use of two lawyers for private mortgages.

Why are Shariah-compliant finance products priced based on percentage rates. Isn’t this interest?

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.

Why is EQRAZ’s halal home financing more expensive than the cheapest available conventional Loans?

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.

Who will benefit from the increase in property prices over time?

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.

Can I make partial or complete prepayments on my halal mortgage?

Yes. You can partially or fully prepay the financing amount due at any time throughout the financing period. However, prepayment charges will apply.

Is EQRAZ Shariah-compliant?

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. EQRAZ’ Shariah-compliance is audited on an annual as well as adhoc basis and Shariah Certificate renewed accordingly. All our documents, systems and processes are Shariah-certified. All our scholars' contact details are available on our website should you wish to contact them. Furthermore, we are compliant with (and members of) AAOIFI.

What is EQRAZ’ source of mortgage funds?

EQRAZ’ sources of funding are 100% Shariah-compliant. We ensure a Riba-free relationship through a Wakala Agreement that we have signed with a Canadian Schedule One bank, hence not borrowing from the bank on interest. Instead, we are taking funds as “Wakeel” and investing them in halal Murabaha mortgages. This is all Shariah-certified and AAOIFI-compliant. Our 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.

Most scholars say that dealing with interest-based banks in any way is prohibited. Do you incorporate any workarounds?

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 provide halal financing to our customers, 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, by taking as much as we can possibly take from these banks, and issue halal financing with those funds. In doing this, we are playing our part in bringing more wealth 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.

What contracts will I sign and are these compliant with both Shariah and Canadian law?

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.

What is Wakala agreement?

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. EQRAZ receives funding based on this agreement with our Canadian-based investors and banks.

Should I use an EQRAZ-approved lawyer, if so, who do you recommend?

We recommend lawyers that have extensive experience in mortgage closings, and have the required training and knowledge associated with EQRAZ’ halal home financing product. We suggest that you use one of our recommended lawyers to ensure that your mortgage closing happens efficiently and without delay. All closings will be completed by one lawyer representing both sides, or – in the case of ON and BC - two lawyers, representing the customer and EQRAZ respectively.

While you are certainly entitled to use a lawyer of your own choosing, we believe that working with a lawyer recommended by us, and who is already familiar with our documentation and processes, will help you save on legal fees and expenses and will likely make the closing process faster and easier. Should you wish to use your own lawyer that is not on our panel, we are happy to induct them for a one-time fee of CAD 5,000 that includes orientation and other costs. Your lawyer may pay this fee or ask you to cover these fees – a conversation that is between you and your lawyer, without EQRAZ being involved in that decision.

You can find our list our recommended lawyers here.

Should I obtain advice from anyone else before proceeding?

Yes, you will need your own lawyer to work with EQRAZ’s closing lawyer to advise you. EQRAZ can recommend from our panel of lawyers already well-versed with our product documentation. However, you are free to choose your own lawyer if you so prefer.

Is my mortgage safe with EQRAZ?

We have a robust contingency plan in place and do not expect any insolvency. We 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 EQRAZ ceases to operate or exist.

What happens if, God forbid, I am unable to pay or the property owner passes away?

If you default on your mortgage payments, we will work with you to find a mutual solution. However, ultimately, if the problem remains unresolved , then we will need to call your mortgage, sell the property, recover our 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.

If I wish to sell my property during a negative equity situation, can I do so and are there any conditions surrounding this?

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 EQRAZ out-of-pocket before the property’s title can be transferred to the buyer and the property sale can be concluded.