The maximum percentage of loan to value (LTV) that can be achieved after the new Central Bank ruling as of January 2014 is now restricted to 75% LTV. This is applicable to purchases under AED 5 million, whereas if it is above this threshold you will only be able to achieve 65% LTV.
Primary costs involved while taking a loan are: Processing Fee (Calculated as % of the loan), Insurance Fee (Buildings + Life of the loan applicant), Property Valuation Fee and of course the monthly mortgage payment. There are many fees associated with buying a property in the UAE, although they can be exacerbated slightly more when taking a mortgage. Most lenders will charge up to 1% of the loan amount as a processing fee, some may add an arrangement fee separately for this also.
We recommend that you use a Mortgage Broker, we have teamed up with Holborn Assets mortgages who offered a large range of solutions and tailor the mortgage to your needs. They also help and assist with the whole property transaction not just the mortgage. There is a charge for this usually a percentage of the loan amount, however, you may get a better mortgage than if you go to the Bank directly. As a professional Broker they are working for you and have your best interest in mind not for the Bank so you would be wise to take their impartial and valuable advice when buying a property.
A separate valuation fee is required to appraise the property value for the Bank’s security normally AED 2,500 – AED 3,000.
Finally the Land Department and or Developer will charge a mortgage registration fee, which is 0.25% of the loan amount + AED 290 admin fee.
Interest is calculated on a reducing balance basis.
Variable rate: No, the interest rate quoted at the application stage is indicative, and may be subject to change before or after the mortgage is disbursed.
Fixed rate: Interest rate quoted at the application stage is a fixed rate for the period you opted, and will be changed once the fixed period expires.
If and when mortgage interest rates fluctuate, your existing monthly payment will be adjusted to reflect any of the decrease or increase of the interest rate. In cases where the interest rate is subject to increase, you ensure that you have sufficient funds to cover your mortgage payments to avoid late payment fees.
The first Monthly Payment will be due on the 30th day from the loan disbursement date.
When you make a monthly mortgage payment, the interest accrued and the outstanding portion of the capital is repaid. Gradually, over the term of the mortgage the balance is reduced and the mortgage is fully paid at the expiry of the mortgage term.
This depends on the type of mortgage you have taken out, some lenders charge a penalty for a certain length of time for over payments. Other lenders allow over payments from the start. Again, if this is important to you ensure that you have asked whether there is a penalty for this.
Early closure of loan is a simple process - Apply for foreclosure; Bank will give you the outstanding amount, which you have to pay by a certain date. This amount also includes an early repayment fee – which is a % of the outstanding amount. Once you pay off the entire outstanding you can get a letter to the effect, which should be given to the developer for transfer of property in your name.
If you are replacing your mortgage with an amount equal to or greater than the existing mortgage, processing fee for the new mortgage will not apply. However, if you are redeeming your mortgage in cash or transferring to another financial institution charge usually will apply.
There are many rates that exist in the UAE mortgage market. You will see rates advertised anywhere from 2.99%, whereas this is not always the rate that you will keep. Be careful when looking for the lowest rates as they normally come with a number of other caveats. This could be fixed for a very limited period and then can jump up to an overwhelming amount, alternatively it could be offered to clients who wish to avail a lower LTV. There are many rates that relate to a number of differing products and all of which need to be explored in depth and fully understood before committing to accept any of them. Always ask for independent professional advice regarding rates and products please fill up the; Request Call Back Form .
There are 3 main factors to consider when calculating how much you are eligible to borrow and there are different categories that people fall under. Categories such as Salaried, Self-Employed, Non-Resident etc.
Salaried is where the borrower or mortgagor has a salary from a company and they are employed on a permanent basis. Banks will generally include all of their fixed income components and under the new guidelines they will consider 50% of this amount as your monthly allowance to pay any form of borrowings known as a debt service ratio or debt burden ratio (DSR/DBR), some banks may also consider variable components like commission or performance bonus. Furthermore, if you have any extra income from property income they will also consider a percentage of this revenue. This DSR/DBR calculation works much the same for Self Employed clients except for they have to provide audited financial reports to show how much money they earned in the previous 2 years. The banks will normally calculate an industry factor based on the gross turnover or a more detailed calculation can be determined from the NET profits. This calculation will be divided into a monthly figure and the same DSR/DBR calculation will apply.
Another factor to consider is the amount of deposit you have in a cash value. This amount will need to cover all of the required deposit and any associated fees with buying a property. Even if your DSR/DBR calculation says you can afford AED 3 million your deposit should be able to support the transaction otherwise the deposit will be the limiting factor.
Lastly, your age plays a very important role; the older you are, the less time you have to pay and the higher your monthly payment will become; this in turn means you are limited by your income/age ratio not to mention that your life insurance premiums will naturally be higher also.
Holborn Assets Mortgages will be able to give you advice on whether it is worth changing from your existing lender including the costs involved.
It would be worth assessing your existing mortgage when looking to release equity as you may be able to get a better deal by refinancing and releasing equity. Holborn Assets Mortgages will be able to help and assist you with this.
Yes, this Insurance provides a cover for the property amount that is mortgaged. It ensures that the Bank will release the mortgage in case of the untimely death of the loan applicant in favor of the applicant's family.
EMI stands for Equated Monthly Installments. It is the fixed payment amount made by a borrower to a lender at a specified date of each calendar month. Equated monthly installments are used to pay off both interest and principal each month, so that over a specified number of years, the loan is paid off in full. The benefit of an EMI for borrowers is that they know precisely how much money they will need to pay toward their loan each month, making the personal budgeting process easier.
Oqood means 'Contracts' in Arabic. Oqood has been developed exclusively for developers to register their off plan properties and subsequently manage their projects and sales contracts. It is an integrated solution that links customers, properties and sales transactions to form a single window for all off-plan projects.
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