10 Tips For First Time Mortgagers in UAE

By bbaeuser | October 4, 2016

Mortgage in UAE

As of August 2016, the oil prices have fallen around the globe leaving the UAE government to pull-back on the country’s real estate investments. But this also means that the prices for people to buy homes and apartments have grown, considering the lowering of real estate prices in the 7 emirates, as well. This means that a lot of people can afford a home in UAE than ever before. It is also a recommended time, considering that crude oil and other futures are also not looking too good. So a home loan is the perfect idea, leading to a lot of youth to invest in homes of their own as a first time mortgage. There are a few ground rules that one should be aware of in such cases. Here, are 10 things or tips that you should be aware for your first mortgage in UAE:

  1. When you are opting for a mortgage, there is a down payment requirement in any place in the World. This is generally a large amount in UAE, considering that UAE Nationals, who are way lesser in number have to pay approximately 20% of the property value at the time as down payment as against the Expats having to pay a whopping 25% approximately  for the same.
  2. The real estate market has a made a huge shift from luxury homes or upmarket apartments to more productive and value for money real estate investments among first time mortgage seekers. Though this is a current trend, it is advisable to invest in real estate that is actually of utility and not just luxury for first-time borrowers, regardless their budget or income.
  3. The loans do not come that easily as suspected in UAE. With the recent Al Etihad Credit Bureau recording your every financial move, it is safe to say that you have to maintain a majorly perfect credit score to be eligible for your first mortgage, regardless again, your budget for the home and affordability.
  4. The other major eligibility that is very essential to maintain is the income you maintain. Though the banks in UAE require you to maintain at least AED 10,000 as monthly income, a buffer amount is always advisable.
  5. If you have any loans and debts pending at the moment, clear them off as soon as possible, before you apply since you do not want to many debt burdens in your head. Also, once you start making home loan repayments, also make sure that you do not go for more than 2 other loans, at the time. Also, make sure that they are not very big amounts.
  6. You want to be prepared for the worst. Hence, make sure that you invest a little more and have your loan protected under an insurance cover, so that in the case of your absence or inability to pay the repayments, your loved ones do not have to suffer.
  7. There are two types of rates of interest that are payable in home loan repayments. You could either choose a flat rate or a reducing rate. While, a lot of people prefer the flat rate of interest, considering that you are aware of the rate and can plan your expenses, in the long run the reducing rate actually helps you pay lower repayments in the longer run.
  8. While UAE banks are very transparent about charges and fees involved in their products, there may be a lot of cases where you invariably are unaware of excess costs and it becomes a liability, later on. The major portion of  hidden costs can be clearly checked out at the brochure or product disclosure sheet. If you are still not sure ask the bank.
  9. UAE is well-known for their real-estate marvels, such as the Burj Khalifa and expensive ones such as Burj Al Arab or the very wide ranged Palm Jumeirah, in Dubai alone but there is a lot more to explore beyond what is visible. Sharjah has good opportunities for first time mortgagers as well.
  10. It is a different coming of age feeling when you own a home but it should not be overwhelming to maintain it. A lot of people have the tendency not to be aware of miscalculating their finances when taking a home loan. Consider that fact that you are responsible for it, for the next 10 odd years to pay the amount.

Be very clear about the ultimate responsibility of owning a home because it comes with maintenance costs as well. However, if you are looking to be a mortgage for the first time and have a good credit history and have planned your future, then you are good to go.

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