Request for Fatwa – Conventional Mortgage for a Primary Residence in Canada

Question

Assalamu alaykum, I have been living in Canada for five years with my wife and our three children. We are Moroccan. We do not know how long we will remain here—one year, ten years, or the rest of our lives—as we still hope to return and settle in Morocco, although we do not know whether this will ever be possible or, if so, when. We currently pay CAD 2,550 per month in rent. We have no retirement savings or pension in Canada, and our combined retirement income in Morocco would not even be sufficient to cover rent here. We are concerned about reaching old age without being able to afford decent housing. Our hoped-for return to Morocco faces several concrete and significant difficulties: a difficult job market that would require both of us to find sufficiently well-paid positions, significantly higher living costs and higher-education expenses compared with Canada, and the fact that our eldest daughter has just started university here. Returning would either force her to interrupt her studies or require her to remain in Canada on her own. I mention these circumstances so that you understand that our uncertainty is not simply a matter of personal preference or feelings, but is based on serious practical obstacles. I would like to purchase a primary residence in order to reduce the risk of being unable to afford decent housing when we reach retirement age. I am therefore presenting my situation to you with complete transparency. I own two apartments in Morocco. If I sold them and added our savings, we would be able to cover approximately 70–75% of the price of a modest house here. The remaining 25–30% would still represent a substantial amount that would be difficult to accumulate through savings or obtain through a private loan over the long term. In addition, transferring these funds from Morocco to Canada would most likely be impossible, or at the very least administratively very difficult, with no guarantee that the transfer could ultimately be completed. In other words, even selling the apartments, with all the difficulties involved, would not necessarily solve the problem. I would also like to clarify that I do not wish to sell these apartments because they are our connection to Morocco and the place where we stay when we visit. Selling them would also make a potential return to Morocco even more difficult. I mention this for the sake of complete honesty, and I leave it to your judgment as to whether, despite these circumstances, I would nevertheless be religiously required to sell them. Before considering a conventional bank loan, I first explored the Islamic financing options available here. I found two providers, Eqraz and Manzil, and both appear to me to be costly and of questionable Shariah compliance. The first, Eqraz, operates through a commodity Murabaha (Tawarruq) structure, at a cost close to twice that of a conventional mortgage. The second, Manzil, presents its product as a diminishing Musharakah, at a rate of approximately 6.3%, compared with approximately 4.3% for a conventional bank. After examining its contract in detail, I identified several elements that make me question whether it is truly a Musharakah rather than an interest-based loan structured differently. In particular: In the event of a loss, the financier bears only 0.00001% of the loss while I bear virtually all of it, whereas in a Musharakah losses should generally be shared according to the partners' respective capital contributions. The financier's shares are always purchased back at their nominal value and never at market value, which appears to guarantee the return of its capital. Its return is not structured as rent corresponding to its ownership share of the property. Instead, it is calculated based on the outstanding capital multiplied by a rate indexed to the Canadian five-year government bond yield plus a margin, which appears to resemble an interest-based formula. All costs associated with ownership, including property taxes, maintenance and insurance, are exclusively my responsibility. The transaction is registered on the land title as a first-ranking mortgage in its favour. I hold legal title only as a trustee on behalf of the fund, with an irrevocable power of attorney granted in its favour. Finally, there is a clause preventing me from challenging the religious compliance of the product and submitting such matters exclusively to the fund's Shariah board. I can provide you with my complete analysis of the contract if that would be useful. Despite these concerns, I submitted an application for financing with Manzil. Based on my professional situation, they would only provide financing of up to CAD 479,000, with a required 20% down payment. I do not have this amount available in savings and would have to borrow part of it, interest-free, from relatives. Furthermore, this approval is only verbal and non-binding on their part, and the organization has informed me that it would not have funds available for disbursement before January 2027 at the earliest, with no certainty that funding would actually be available at that time. In addition, this amount would not allow us to purchase a home that adequately meets our family's needs: sufficient space for three children, including two teenage boys who cannot reasonably continue sharing the same bedroom, and a location that would allow our children to remain in their current schools and preserve their educational stability at an important stage of their studies. I am not seeking a luxurious home. I am seeking a home that is adequate and reasonably suitable for our family. Nevertheless, I leave it to your judgment to determine what may legitimately be considered a genuine need in our particular circumstances. Finally, I obtained a mortgage pre-approval from a conventional bank for up to CAD 600,000. Combined with our available down payment, this amount would actually allow us to purchase a suitable home for our family. Therefore, at this point, a conventional mortgage is the only practical avenue that would allow us to purchase a suitable primary residence, which is precisely why I am seeking your guidance. My question is: Given the circumstances described above, would I be Islamically permitted to purchase my primary residence in Canada through a conventional bank mortgage involving interest (riba)? I sincerely wish to receive the answer according to what is true and correct from an Islamic perspective, even if the answer is unfavorable to me. Jazakum Allahu khayran for your time and consideration. May Allah reward you abundantly. Assalamu alaykum wa rahmatullahi wa barakatuh,