(RNS) A report for Canada’s national housing agency says Shariah-compliant mortgages would pose no legal problems.

Neither would other Islamic financial products, states the 88-page study, done for the Canada Mortgage and Housing Corp.

“Islamic financial products should not present any particular difficulties under Canadian accounting standards,” says the study by the Canadian law firm Gowling, Lafleur Henderson LLP, released in late January.

No chartered banks currently offer Islamic mortgages. The report says there would be no legal obstacles if private entities offered the financial services to Canada’s Muslim community, believed to number at least 700,000.

Because Shariah forbids interest of any kind, Islamic mortgages work by having the lender either buy the home or become an equity partner in its purchase. The homeowner then pays monthly “rent” along with principal payments based on competitive rates.

The arrangement is based on profit and trade, both permissible.

The study notes that demand for Islamic financial services in Canada exceeds supply.

UM Financial, a Toronto-based financial firm operating within the Muslim community, holds about 500 mortgages valued at $120 million through an arrangement with the Credit Union of Central Ontario.

UM Financial estimates that about 5,000 Canadian Muslims are prepared to transfer their current conventional mortgages to Shariah-compliant ones if a bank offered the service, Canadian Press reported.