UAE Mortgage Loan: Get Your Dream House Now!
Dubai‘s real estate industry is becoming stronger day by day because of the number of opportunities that are open to all kinds of investors. Dubai is considered as one of the biggest cosmopolitan city in the world. Dubai has a number of prime locations as far as properties are concerned. The buyer generally gets confused about which property to buy and which not. If on one side there are luxurious apartments of famous Dubai Marina then there are beautiful villas at one of its kind architectural beauty ‘The PALM’. There is a long list of the real estate options available in the city. All are unique in their own way and every community is different from each other.
Well, thinking of buying a house is quite easier as the compare to the process itself. Buying a house involves lots of planning and decision making. It is among one of the most important decisions in the life of an individual. Ideal planning for buying a house should start even before finalizing the decision of buying a house. Pre-planning involves improving one credit score. Credit score plays a very important role getting an approval for a UAE mortgage loan. Planning finances beforehand are very important. Buying a house is always an emotional decision for a family, hence it is important to make sure that buyer has made arrangements for the finances which are required to by the dream house. UAE mortgage loan industry of Dubai is quite smaller as compared to other cosmopolitan cities of the world. There are around 30 UAE mortgage loan lenders in the city. However, like real estate industry, these UAE mortgage loan lenders have a variety of UAE mortgage loan packages for the borrowers. Potential buyer performs a thorough research of market to find the best available UAE mortgage loan Dubai. Each and every buyer aims to get the cheapest UAE mortgage loan for his house.
As far as UAE mortgage loan is considered getting a pre-approval is highly advisable. Pre-approval of UAE mortgage loan Dubai helps the buyer to know about his buying capacity. This further helps the buyer to make a decision regarding which property to look for and which not. This decision is purely based on affordability.
The ideal UAE mortgage loan depends on following factors:
- Property in which buyer is interested;
- Expected UAE mortgage loan amount
- How much deposit amount will buyer be able to pay with UAE mortgage loan
Different UAE mortgage loan Dubai banks or other lenders follow different procedures as well as a criterion to decide whether the borrower is capable of repaying UAE mortgage loan amount or not. Some of the criteria’ which are followed by almost all UAE mortgage loan Dubai providers are mentioned below:
- Check for ongoing debts and liabilities. As per law by Central Bank Dubai, a borrower cannot pay more than 50% of his total income towards paying off his debts and liabilities such as loans, credit card bills, UAE mortgage loan repayments etc.
- Type of employment: this means the decision is made on the basis whether the borrower is an employee or a businessman. In service also whether he is a full-time employee or work on contractual basis. This helps to determine the regularity of income of the person who has applied for a UAE mortgage loan.
- One major deciding factor in case of UAE mortgage loan is the total income earned by the applicant.
- Comparison of the value of the property that applicant for UAE mortgage loan wants to buy and the loan amount that can be approved by the UAE mortgage loan
- Type of lifestyle the applicant lives: This includes how many dependent the applicant has, the car he drives, etc.
- What kind of loan, the borrower has opted for?
- Assets and savings. This is a major factor as higher the assets and savings more are the chances that lender will approve the loan application.
While looking for the cheapest UAE mortgage loan an applicant comes across various financial terminologies. It is very important to have a clear understanding of these UAE mortgage loan terminologies as it will make the dealing quite clear and will also help in avoiding any kind of confusion. This will also help the applicant to select the cheapest UAE mortgage loan, provider. Some of the most common terminologies used by UAE mortgage loan lenders are mentioned below:
- Early Repayment charge: This is also used in its short form i.e. ERC. As the name suggests it’s a penalty charge which is levied on the UAE mortgage loan borrower when the borrower wants to repay the loan amount prior to the committed time frame. The amount of ERC levied on the borrower depends on the type of UAE mortgage loan availed by the borrower. The loan may be a fixed interest rate loan or loan in which interest rate is variable.
- Loan-to-Value Ration or LTV: LTV refers to the amount of money borrower has got from UAE mortgage loan relative to the total value of the house or any other property that the buyer intends to purchase. For example, if Loan-to-Value Ratio is 75% then this means the buyer has made 25% of the total value of the property as down payment and has applied for the 75% of the property value as a UAE mortgage loan.
- Equity Release: Equity is a method by which a buyer of the property can earn more money from his property. When a borrower starts repaying the loan amount the debt on the property keeps on decreasing and hence buyer can start building up equity on the property he owns. A buyer can use the equity of his property for more borrowing purposes.
- Remortgaging: This basically means changing of UAE mortgage loan provider in between the term of the loan. Depending on the circumstances or available opportunities a borrower of the UAE mortgage loan may decide to change the loan provider. This is known as remortgaging. It is always better to consider the pros as well as cons before going for remortgaging.
In Dubai, it is mandatory for all the UAE mortgage loan providers to sign a Loan Protection Insurance. As per this policy, if something happens to the borrower (death) during the loan term, then this helps to pay the balance mortgage amount. This is very useful in case borrower is a family man, as this helps family members to continue with the regular mortgage payments. Other kinds of insurance policies are also there through which borrower can repay his mortgage payments in case of any mishappening.
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