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Mortgage finance in the UAE – How to get it

The UAE property market has always remained one of the most attractive property markets of the world. Especially Muslims across the world always wish to have their second homes in the UAE because it offers a mix of Islamic & Arabian culture, safe environment and a healthy lifestyle. Now as the property prices in the UAE have fallen to a good extent and mortgage rates are favouring buyers, many investors, who always longed invest in the UAE property market, have become active.
Property prices have fallen to almost 60% from their peak in 2008 in the UAE and now investors around the world feel that it’s the best time to invest in the UAE real estate. Recently, almost all banks in the UAE have slashed their mortgage rates, in attempts to entice even more buyers to invest in the UAE properties. But there is a still a good number of buyers who are staying away from real estate investment because they don’t know what to do to secure a finance.
Currently the top five active lenders in the UAE which advise buyers on mortgage finances are RAKbank, Abu Dhabi Commercial Bank, Dubai Islamic Bank, Mashreq Bank and Standard Chartered Bank. I am elaborating how property buyers can get mortgage finance in the UAE to make the most out of current situation.
1. If you do not know which properties are better to invest in, you can hire a mortgage broker for guidance. He can suggest a suitable bank for you and provide you with all the possible options that match your budget requirements and other specifications. He can also take care of all the paper work on your behalf.
2. After deciding on bank, you need to pick out the best mortgage deal for yourself. Always decide the deal based on your ability to repay loan, repayment period and the amount of deposit in hand. If you have plans to pay the mortgage early, go for the deal that offsets the loan without extra payments. Mostly if you have a deposit of 25% of the loan amount, all possible options of finance are available to you.
3. Get a loan approval from the bank, which is usually valid for 90 days. Mostly the UAE banks require a minimum salary of Dh 10,000 to 15,000 per month to be eligible for mortgage loan and issue approval easily if you fulfil their eligibility criteria. You need to file bank statements of 6 months, address proof, copies of credit card bills, proof of other mortgages you have previously acquired in the UAE, copy of passport etc to get approval in hand.
4. Besides deposit, you are also required to pay some additional fees, which is 4-5% of the total mortgage loan. Always keep some money aside for such fees which include almost 1.25% bank process fee, 0.25% mortgage registration fee, AED 3000 for valuation fee, 2% early repayment fee, 1-2% transfer fee, 1% arrangement fee etc. Unless you know the estimated cost of such fees, you cannot keep enough cash in hand.

5. For all UAE mortgages, buying life insurance is a compulsion. It is better to get this insurance on your own because if you will purchase an insurance policy as per the bank’s choice, it can be more costly. Besides that, keep an eye out for all the hidden costs charged by the banks, For instance, check out the method of interest calculation, penalties, and property insurance costs.
6. Bank then checks your credit history and invites you to sign a memorandum of understanding, which is an agreement between you and bank negotiating clear parameters like fees, balance of payments, price, time to maturity, deposit and transfer dates etc. After that, wait patiently till the property gets transferred to your name. Normally the whole transfer process does not take more than 5 weeks but this time period may vary for different banks.

Susan

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