BSO Mortgage Assistance
Yes, when using mortgages and bank loans to raise funds, your total cost of ownership can be twice higher compared to using your own money. Still, if your savings are limited, this is the only option to become a happy owner. After all, when you renting a flat, you pay money as well but this doesn’t drive your closer to your target of having a home of your own.
In this post we reveal the mortgage basis to get you familiar with its peculiarities for you as an expat.
Keep in mind, not only banks can lend you money but other financial institutions and private lenders as well. At BSO, we established strong relationships with private lenders in Dubai to provide advanced assistance in lending issues for our clients. These lenders may not only raise funds for your property investment not regarding your credit score, but provide discounted pre-construction loans on attractive conditions.
Dubai and UAE's mortgages and home loan offers
When you need to get a mortgage in Dubai, start with a market survey. In other words, you need to find, analyze, and benchmark as much offers as you can. Here, we give you a brief overview of some facts concerning interest rates. In Dubai, there are two basic options when consider the cost of the loan:
- Fixed interests;
- Variable interest.
Interests may be fixed for a year or more. However, some offers invite to get a mortgage with a five-year fixed period. Note, the longer the period, the higher interests a lender charges. For example, for the one-year fixed period, the interest rate starts now from 2.7%. In contrast, for the five-year fixed period, the minimum interest rate now is 2.99% but can be of 3.6% and even more.
As you understand, after the stated period an interest rate is adjusted to the current market. To clarify, it may be higher than the initial one. Nevertheless, chances are it may be lower as well.
When it comes to variables interest rates, a lender has the right to alter it applying a new policy as a response to the market state and other terms and conditions.
How do deposits, down payments, mortgages and bank loans work?
When you are going to purchase a real estate asset, you may have to reserve your intentions with a deposit regarded as a pledge for a contract, your first installment. Later, you shall pay the whole balance to complete the deal with money you own or borrow.
If you apply for a mortgage loan, a lender is likely to give you not all the sum to pay for your home actual value. In other words, you can raise funds that cover only a part of its sale price, though it may be the biggest one. So, you need to pay the remaining part with your savings. This sum to cover the remaining part is called a down payment.
The down payment and it stands important for creditors for two reasons. First, it shows your interest in real estate purchase is real and backed up with your money. Second, it increases the lender’s confidence you will do your best to redeem the loan so as not to waste your initial funds.
Still, a down payment is your option to consider as well. To clarify, it affects the fund you have to raise with a loan. The higher the first, the lower the second. In turn, a sum you borrow affects how much your monthly repayment to be and whether you can afford them. Here, the higher the first, the higher the second.
Acquiring a flat or villa with a mortgage or bank loan, you get certain liabilities for a specified period (up to 30 years and even more). You must repay a certain sum every month to gradually redeem your principal. Besides, you must pay the interests to your creditor for using his money.
In case a borrower fails to cover one’s liabilities on time, a creditor will apply penalties. If the case goes worse and a borrower fails to redeem the loan, a lender will put a lien the property being mortgaged and sell it be public auction to redeem the mortgage.
Terms of lending and mortgages for the purchase of real estate in the UAE
Typically, to get the loan in the UAE as a non-national, you need to conform to certain criteria:
- Have a clean credit history;
- Work more than six months (or even a year) at your existing position or run your business for more than two years in case of self-employment;
- Working for banking institutions and large multi-national companies may be regarded as an advantage;
- Deposit 20-35% of a unit purchase price as a down payment in case of completed units and 50% in case of off-plan units;
- Have a monthly income that exceeds your estimated mortgage repayment at least twice;
- Be supposed to earn not less than the total amount of a mortgage repayment, including interests, in the next seven years.
To sup up, getting a mortgage may be not an easy path to walk in Dubai for non-nationals. That is to say, you may face many obstacles and restrictions to get a high credit score. That’s why you need a lending expert assistance to successfully proceed and complete the deal. At BSO, we are great at finding a lending solution that is optimal for your case. Contact our experts for more information about available options and offers.