FAQS

A sort of financing that complies with ethical law is known as halal – compliant financing. When it comes to the regular financial dealings of Muslims, there are a number of guidelines and prohibitions found in the Quran and the Sunnah (recorded sayings and habitual practices of the Prophet Muhammad, Peace and Blessing be Upon Him). Riba (usury/interest), gharar (speculation or contractual uncertainty), and maysir (gambling), for instance, are prohibited. A normal mortgage uses interest payments (riba), which are forbidden in Islam, all monotheistic religions, and even some non-monotheistic ones. Riba is not a part of the halal – compliant home finance plan offered by Tjara Halal Finance. Tjara provides a participatory financing program called the Declining Balance Co-ownership Program, which is based on an equity partnership between Tjara and its customers.

The scheme offered by Tjara Halal Financing differs from a traditional mortgage in the following manner.

a. Co-ownership Homebuyers and Tjara Halal Financing are co-owners of a portion of the property. Homebuyers gradually increase their part through monthly payments, which causes Tjara’s share to shrink in proportion.

b. Sharing of risk: If a natural calamity causes the property to be lost, or if a government-initiated project evicts you from the property, the risk is shared. In this case, the government or insurance proceeds are split according to the ownership stake at the time of the loss. Similar to this, lenders of conventional loans will use the funds to settle the loan without any allocation.

c. Riba-free: The Declining Balance Co-ownership Program does not involve payment of interest between a debtor and creditor. It is 100% riba-free.

d. Late payment fees: In the event of late payments, Tjara Halal Financing will only collect the fee and donate it to a charitable institution. Tjara Financing does not pursue any of the homebuyer’s other assets in the event of payment default.

Halal financing avoids interest-based transactions and uses a partnership form of financing rather than borrowing money at interest, which is the primary distinction between halal financing and conventional financing options. The interest on borrowed money is not the foundation of our model. We use the partnership approach to provide a halal mortgage solution. A partnership arrangement that differs from an interest-based mortgage in that Tjara and a client (or partners) agree to a type of shared ownership. Instead of borrowing money with the intention of paying interest (which is forbidden in Islam), real estate is bought using a declining balance contract with a contribution from you for the down payment. In return for regular payments, you have sole use of the property with your name on the title.

The total payment is comprising of an amount for the principal and an amount for the usage. In addition to making payments toward the Tjara’s portion of the property (principal) of the property, you pay a profit rate for using Tjara’s (or partners’) share of the property. Through this agreement, Tjara (or partners) will pay recurring payments toward the asset until you have fully repaid the principal, at which point Tjara will vacate the property. This kind of agreement is known as a Declining Balance Partnership. The primary things we have to stay away from when constructing halal funding are riba (interest), ambiguity in contractual agreements, gambling, and profit- and risk-sharing responsibilities that directly apply to our business. While usury, the practice of collecting interest, makes ordinary finance repugnant to the principles of Ethical belief.


Halal financing is permissible. The reason for this is that they stated: “Trading is but like riba.” And Allah has approved of trade and forbade riba. 275 Al-Baqarah. The fact that traditional banks borrow money and entirely transmit risk to the borrower contrasts with the partnership model, where risk and profit are shared by the partners. In this example, Tjara distributes the risk with the home buyer in some loss scenarios. Keep in mind that this product is not intended to serve as a contract between a buyer and a seller. Instead, this program is made to allow the buyer to make monthly Principal and Home Payments that lessen Tjara’s (or partners’) ownership stake in the property, eventually leading to 100% ownership. The product is made in a way that the net cost and security will be nearly identical whether a customer chooses a normal mortgage or a halal mortgage. This item satisfies the requirements for a Partnership, and the contract is admissible in any jurisdiction.

In a co-ownership arrangement, Tjara Halal Financing and the homebuyer each own a share of the property in accordance with the equity they each invested. Homebuyers must pay Tjara Halal Financing on a regular basis for a defined amount of period in order to fully acquire Tjara Halal Financing’s ownership interest in the property. The monthly payment is split into two parts:
(1) an acquisition payment (Acquisition Payment) to buy a piece of Tjara Halal Financing’s ownership interest; and
(2) a usage payment (Usage Payment) to use the entire property exclusively.

Over a defined period of time, the Acquisition Payment is used to purchase Tjara Halal Financing’s ownership shares. The Usage Payment resembles rent or the use of someone else’s property. For instance, if you want to buy a $300,000 house and you have $30,000 to put toward the down payment, Tjara would put the remaining $270,000 toward the house so that we can buy it together. Tjara will buy the property with you, and we’ll create a co-ownership arrangement that says we both own it jointly. Then, we set up a 5-year contract under which you pay Tjara Financing a monthly fee. That payment will include a portion used to acquire Tjara Halal Financing’s ownership. The exclusive use of the property is covered by the other portion of the monthly payment. The portion that goes toward purchasing Tjara’s ownership will increase by the same amount each month to maintain the same monthly payment, while the portion that we charge you for the full usage of the property will drop each month as our ownership in the property diminishes. You may sell the property at any time in line with the conditions of the co-ownership agreement, and any profit from such sale shall be entirely yours. For instance, if you sell this house for $350,000 after 5 years, the additional $50,000 will be entirely yours.

Tjara Halal Financing is special because for halal compliance of our products, we approached some of the top experts in Ethical finance from around the globe. These experts are well known for their knowledge in Ethical financial transactions law. The Scholars guided us in providing a product that complies with halal and entails no additional risk for the financier.

A debtor and creditor loan structure does not exist under our halal – compliant home finance plan. According to the belief, lending money to profit from any kind of business or investment venture, including financing real estate, is not a legitimate way to do business. As a result, our mortgage program was developed using the Ethical financial principle known as “Diminishing Partnership.” In contrast to a borrower-lender arrangement, Tjara Halal Financing and the homebuyer are co-owners of the property. The funds from Tjara Halal finance are used to buy a stake in the property, not as a loan.

Keep in mind that Halal financing is a very new idea in Canada, and phrases like “profit amount” and “home payment amount” that we employ are not yet used in Canadian law. Regarding mortgage transactions, all institutions in Canada utilize the same standard documents and jargon for lending. Modifications to these terms to accommodate our product and others in which interest is not present have not yet been approved by the government. The Ethical Advisory Board of Tjara has published a fatwa on our website stating that they are aware of financing practices in Canada. Since Guidance Residential, the top halal financing company in the USA, in their fatwa allow clients to use the term interest in documentation due to USA law. Due to Canadian government regulations, we built the product in this way to get the best pricing for customers. To acknowledge alternative mortgages and modify the current nomenclature, our organization has already begun conversations with the Canadian government. In the upcoming years, we intend to implement these changes in collaboration with our partners. Your support now will assist in demonstrating to the Canadian government the necessity to address the individual needs of all Canadians and the demand for such regulations.

Yes. The client will have the title to the property from day one. You will be the legal owner of the property, with all of the associated rights and obligations. Tjara only requires a mortgage charge on your property, so if you sell it, you must first pay the outstanding finance balance and all associated fees before using the sale proceeds for any other reason.

Yes, you can sell the house, keep every penny of the profit, and make upgrades without lowering its value. Gains and losses are distributed in accordance with Halal financing regulations based on the proportion of ownership. We have a buy-out clause in our contract that allows you to remove our portion of the Partnership contract prior to the sale. This takes place just before the property is really sold so that you can keep all of the capital gains and similarly losses. You have the option to make changes, improvements and upgrades in the house or give a portion of it for rent. As you would with other Canadian financing choices, you do not need to obtain Tjara’s consent for these upgrades and improvements. It would be necessary for you to restore the house to its previous state if the modifications you make have a detrimental impact on the value of the property. Property taxes, insurance, and upkeep are all your duty as a homeowner.

Every halal bank and financial institution in the world promotes and offers its products using a percentage rate. This makes it possible for customers to compare the price of halal financing to that of conventional products fairly. A percentage rate does not mean that there is interest involved; it merely informs you of how much the financing will cost you relative to the amount of your halal home financing.

Payments received beyond the due date may incur administrative fees. Making money off of late payments is prohibited. Although the financial institution charges late payment fees, as do all institutions, our partners have agreed that any sum above the administration costs incurred by collecting late payment penalties will be donated, as per our Ethical Advisory Board’s directive, to a registered Canadian charity. We also use AAOIFI-compliant delay penalties that have been authorized by Tjara’s Ethical Advisory Board to deter habitual late payments, which would otherwise considerably raise the cost of halal financing for all of our clients. However, the extra money is given to a charity. Any additional revenue from these extra fees is not profitable for Tjara. This has been endorsed by Tjara’s Ethical Advisory Board and is in accordance with halal law and AAOIFI requirements.

In case of a default that is beyond your control. As per the guidance of the Ethical Advisory Board we work with you to allow you additional time and in some cases help you to cover these payments on your behalf and charge you to recoup them later and deal with the situation as per the guidelines of the Ethical Advisory Board.

We comprehend that unexpected events may temporarily prevent you from making regular payments. Technically speaking, you would be in default after two missed payments. The funder, our business partner, has agreed to let us take care of default resolution and will let us know about the default. Your manager will get in touch with you or your family in order to ascertain whether you are truly in distress. After that, we’ll talk to our Ethical Advisory Board. Tjara will work with you to figure out what can be done if your circumstance is deemed to be distressing. Tjara can suggest renting the property out or selling it, or it might make payments on your behalf during the distress period, and that must to be repaid.

It is crucial that you let us know right away if you find yourself unable to fulfill your financial obligations. We will make a sincere attempt to work with you in a helpful and collaborative manner through your challenging situation and to treat you fairly and compassionately; our actions will depend on your specific circumstances and we will work under the guidance of the Ethical Advisory Board.

However, in the end, it is your obligation to make sure you can afford your monthly payments since you risk losing your house if there are any delays or defaults.

The leading international organization for Ethical Finance standard and compliance is called AAOIFI, which stands for Accounting and Auditing Organization for Islamic Financial Institutions. We have embraced its Halal requirements and urge other businesses in the market to follow suit. According to AAOIFI Halal Standards, every institution engaged in Halal Financing should have an impartial three-person board that signs the fatwa. Two of the three members should be senior, meaning they have previous board experience with other financial institutions.

Our product meets the prerequisite requirements of AAOIFI for a Partnership Contract. We are ready to represent ourselves in any court as a partner under the Partnership , as the agreement is between two parties. A court may consider the Partnership contract as evidence in its proceedings. Our product is clearly designated as Halal in a fatwa that was granted by reputable international industry scholars and academics with religious education as well as PhDs in relevant fields. These fatawa from reputable world renowned halal experts are available on our website, thanks to a lot of work by Tjara. The profiles of our scholars are also available on our website or through an internet search. To ensure that Muslims in Canada can access halal money, keep in mind that these scholars have vast knowledge in Ethical finance and that they gave their fatawa/pronouncements in good faith. Our product has also received support from other local ulema/scholars. A continual review of the product and halal audit is conducted by the Ethical Advisory Board. You’ll be glad to hear that, under the supervision of Dr. Aznan Hassan, the Ethical Advisory Board will conduct yearly audits and, or as required by the Ethical Advisory Board, make suggestions to keep the product halal. Tjara aspires to uphold the high compliance standard.