Article courtesy of Jo Phillips, General Manager, Holborn Assets Limited – Mortgage Division
- Understand your existing Mortgage
Ensure that you understand all of the fees associated with your existing mortgage for changing lenders. Here at Holborn Assets Mortgages we can do a full comparison break-down of whether it is worth you changing your mortgage. From our experience if you haven’t reviewed your mortgage in that last 3 years then savings can be made. Headline rates with other lenders don’t always have the best terms so it is worth going through all of your options before signing.
- Keep Liabilities to a minimum
A key factor in determining whether someone can afford a mortgage is their debt-burden ratio, calculated by the Bank by adding all of your existing liabilities which should not exceed 50% of your monthly salary. Additionally, 5% of all credit-card limits are added to the tally as well because Banks calculate a borrower’s affordability based on your limits and not the outstanding balance.
If you have a lot of Credit Cards, then it is worth considering either reducing or cancelling some of these before applying for a mortgage.
- Check Promotional Rates
Most Banks offer a good introductory rate in order to gain business but it is important to understand what the rate will be when the promotion ends. Always check what the revert rate will be and how it is calculated.
There is always a fixed element but the variable part is calculated either based on the Emirates Interbank Offer Rate (EIBOR), or the Bank will use their variable rate. Also, a lot of Banks set a floor rate, which is the minimum that the rate will ever be set to and will never go below this.
- Deposits & Fees
Fees in the UAE are payable upfront and on top of the deposit, this can range from 7.5 – 8%.
As an expat, for any property up to AED 5,000,000, you will need a deposit of 25%. For Purchases above AED 5,000,000 you will need a deposit of 35%. For secondary or investment properties you will need a 40%. Off-Plan properties are limited to 50%.
- Salary Transfers
If you are willing to transfer your salary to the Bank where you are taking the mortgage, you may get preferential rates and terms. This is now an easy process and will require you to get a salary transfer letter from your employer and new Bank details so this can be actioned. If you have a personal loan with your existing Bank then it is unlikely that you will able to transfer your salary until this is paid off.
- Get Offers in writing
Banks try to win your business by promising things that sometimes can’t be delivered. Ensure when you get the offers that everything is put in writing as this commits the Bank to the product.
- Do the Numbers
Calculate how much you would save with your new mortgage. Include all fees related to switching to another provider. Holborn Assets Mortgages will help you to do these price comparisons.
Review your mortgage at regular intervals. When you take a mortgage through Holborn Assets Mortgages we would contact you when the promotional rate is coming to an end to see if you are better remaining with your existing lender or moving to a new one.
Holborn Assets Mortgages are an independent mortgage specialists who have access to the top UAE Banks. They can tailor your mortgage to suit your needs and take care of the whole process from start to finish including help with the property transaction. Click above to contact Holborn Assets Mortgages today for more information.