I own a villa in Dubai which is still on mortgage and I am moving to Canada with my family and I don’t want to sell my property. Can I continue to pay the mortgage as usual or the terms will change? Kindly advice, what should I do.
This is a very common question among expats buying a property on a mortgage in Dubai as at some point they leave UAE. Now in your case it would be mentioned in your loan agreement which you must have signed at the beginning of the loan, generally lenders do mention clause with regards to the relocation of the applicant. UAE lenders are very complaisant in such cases and as per the UAE law you should notify your lender about your relocation plan if you have any obligations before leaving the country. The main concern would be that with your relocation, how your profile would change. If your case is evaluated as a high-risk obligor based on your relocation plans then the lender would restructure your current loan as per non-resident lending parameters, wherein you would need to provide the details of the new employment along with necessary documentation and security cheques. It’s become little complicated with banks if they do not have non-resident product. I would advise better you check with your mortgage consultant and discuss the case.
I am thinking of buying a property in Dubai as an investment. Currently have a few in the UK with my business partner and we are looking to buy together in Dubai too. But we are looking for a mortgage to support our purchase, kindly guide if we can get a mortgage on a ready property and can we put it on rent immediately?
Yes, you can buy any property in Dubai as a non-resident and you can even lease it immediately after the property is transferred on your name and new title deed is issued from the Dubai Land Department. There will be some nominal charges which you will be paying like DEWA (Dubai Electricity and Water Authority) and maintenance charges with the developer. Now coming to your ownership status, if you wish to buy the property with business partner in joint name then you can do cash purchase but if you planning to get mortgage against your property, then it should be either in your name or your and spouse’s name jointly, but as business partners you cannot get the mortgage in Dubai, as it will not be considered.
However, both partners can individually apply for mortgage loan considering similar income source from the business, wherein the lending bank would do their due diligence in validating the eligibility criteria as per the profit shares in the business.
I am planning to buy a villa in Dubai and willing to get the mortgage finance. But before deciding the property, should I get the pre-approval from bank, but if afterwards, I postpone my buying idea or if I like the property of higher prices, then I need to get the pre-approval again or how it works?
See, the pre-approval is the preliminary stage of mortgage undertaking in the home buying process, as agents and sellers want evidence of a buyer’s ability to secure a mortgage and bid on a property. It is a prudent and powerful first step towards the homeownership journey, not only this but with pre-approval you (Buyer) can distinguish what the buying power is and also what your potential payments and exact debt funding costs will be. So, it’s strongly recommended that you only sign the property purchase agreement after you have the pre-approval from the lender if you planning to take a mortgage for that property. Further, the pre-approvals remain valid for 30 days with most of the banks, so you have a months’ time to decide, but if you think you need more time to finalize your purchase then also you are free to do so. You can renew your pre-approval any time with your lender by simply updating your current financial updates.
In context to your another question that if you wish to buy a property of higher price, then as I earlier mentioned that pre-approval document itself identifies your spending limit by analyzing all your funding corpus, well if you think you still have strong monetary background to support your purchasing then anytime you can update it with your lender and they can evaluate your purchasing power.
I own two properties, one was cash buy and rented and the other I got mortgaged and currently live there. We would like to get some equity release from the rental income. Can I get equity release on rental property, any advice?
Yes, you can get equity release on your rental property. There are few lenders in the market which would consider only your rental income to provide equity release on your property. However, the interest rate may be higher and this will be because there is a risk for the bank when lending on such a property that is not the customer’s main residence.
The eligibility of the loan amount would be defined by the rental value of the tenancy agreement and current market value of the property as most financiers would lend up to 50% of the market value of the property keeping in line with eligibility qualification from rental income. Also, the rental income would need to be assigned with bank till the loan facility has been availed.
I am planning to take a mortgage and was advised to go for a fixed rate mortgage. Can you please guide me on fixed rate and adjustable rate mortgage terms and how it will affect in long terms?
Sure, in mortgage repayment structure, Fixed-rate shows interest rates that do not change during the loan tenure, whereas, Adjustable-rate have loan rates that are allied to an index or benchmark rate and hence can be changed over the time. In fixed rates, borrowers know the exact payment amount and therefore, will have an easier time performing their personal budgeting, regardless of whether rates rise or fall. When mortgage interest rates are going up, a fixed-rate mortgage is recommended. But when rates are falling, borrowers should opt for adjustable mortgage rates, as it keeps on changing at the regular intervals (usually most banks have one, two or three year fixed rate), thus allowing borrowers to capitalize on the new, lower rates.
The factors which may affect your decision regarding fixed or adjustable rates are considering how a higher monthly payment would impact your budget if rates increase and the length of the time you plan to stay in your house. However, assuming the current market trend, you can definitely go for 1 or 2 year fixed rate and then you can have adjustable rates in your repayment structure. The mortgage repayment is grounded on your precise requirement and very much depends on your future plans for the property purchase, your current and future fiscal plans, etc. So, you can select the best options, as per your plan and requirement and make the smart decision!
As Published on September 05, 2015 in GN Properties