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Welcome to the 2022 Allsopp & Allsopp 2022 Annual Property Market Report

In this week’s episode of Taking Care of Business, CEO Lewis Allsopp and COO Carl Allsopp sit with Allsopp & Allsopp’s Head of Mortgages, Stuart Roe to discuss in detail rising interest rates, and why Dubai is still in an attractive offering for mortgages despite this years market changes.

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Mortgages in Dubai, an important update

![A&A_MonthlyReport_September2022_ForWebsite_v8.jpg](https://strapiallsopp.s3.eu-west-1.amazonaws.com/A_and_A_Monthly_Report_September2022_For_Website_v8_bb2e605d23.jpg)

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September 2022 Dubai Real Estate Market Snapshot

In this week's episode of Taking Care of Business, Operations Director Paul Kelly and General Manager Marc Walters explain the new changes that have taken effect across the Dubai Real Estate Market. One of these being that owners can now only list their properties for sale with a maximum of 3 brokers, however, Paul and Marc explain the substantial benefits of going even further, and listing with just one.

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New Changes to the Dubai Real Estate Market

In this episode of Taking Care of Business, CEO Lewis Allsopp and COO Carl Allsopp share 14 business lessons that the pair have learned from 14 years since founding Allsopp & Allsopp back in 2008. They also discuss personal lessons that have shaped the two of them, and Allsopp & Allsopp as a company over the years.

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14 Business Lessons for 14 Years in Business.

<p>Overseas and intrigued about investing in Dubai? We've got you. Here's how you can do so.</p>
<p>To find out more, reach out to:<br />Lee Weston on +971 58 577 8542 or click here to send a Whatsapp message: <a href="https://wa.link/fomxd9">https://wa.link/fomxd9</a><br />Amy Dixon on +971 58 545 7183 or click here to send a Whatsapp message: <a href="https://wa.link/zbl7v5">https://wa.link/zbl7v5</a></p>

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Thinking of buying in Dubai even though you're not a resident? We've got the answers you need 

In this week’s episode of Taking Care of Business, CEO Lewis Allsopp and COO Carl Allsopp start off by celebrating Allsopp & Allsopp’s 14 year anniversary which happened this week! They then take a look into data from The Dubai Land Department and Allsopp & Allsopp for August, to give you the most comprehensive report on the current market conditions.



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What happened this August in the Dubai Real Estate Market? 

![AA MonthlyReport August2022 ForWebsite](https://strapiallsopp.s3.eu-west-1.amazonaws.com/AA_Monthly_Report_August2022_For_Website_bf4ac9de79.jpg)


Looking for mortgage rates? [Click Here](dubai/mortgages)
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 August 2022 Dubai Real Estate Market Snapshot

You begin your search to buy your dream home by browsing online through property portals at houses for sale in your favourite areas of Dubai - this, of course, is a good starting point, however, are you looking within your budget?


Buying a house in Dubai can be exciting and as you scroll through properties available on property portals, you must keep in mind that before you get too ahead of yourself, a mortgage pre-approval is needed! 



In today’s real estate market in Dubai, properties are selling fast and there is a lot of competition out there for buyers. Viewing properties before you’ve had a conversation with your bank can set buyers up for disappointment - especially now that the interest rates are increasing! Right niw the lowest fixed rate starts from 2.43% with the floating margin starting at 1.75%. The lowest fixed rate in December started from 2.09%



The importance of securing a mortgage pre-approval before beginning the search to buy a property is imperative. Even if it may seem premature wouldn’t you like to know exactly how much money you have to play with and not get your hopes up by looking in areas well above your budget, or perhaps the opposite – you have a larger budget than you first thought.


**Benefits of getting a pre-approval at the beginning of your property search**


The benefits of a pre-approval are undoubtedly endless and essential for home hunters. If you already have a pre-approval in place you know your affordability when beginning your property search. You have a solid knowledge in place of what fees are expected upfront and be clear on how much cash you will need to complete a transaction.  Additionally, you will know how much your monthly repayments will be thus giving you the confidence when communicating with agents and negotiating with sellers. 


As well as this, when the right property comes along, you are in the best possible position to make an offer. You are ready to take the next step and avoid lengthy delays if you were to then approach a bank to start the pre-approval process.


The advantages of a pre-approval are also of much benefit to sellers. A seller will appreciate the readiness of the buyer when an offer with a pre-approval is presented. If you are a seller you don’t only look to get the best price for your property but want to make the process of selling as simple as possible for yourself and the buyer. A buyer with a pre-approved mortgage is ideally the perfect patron for you. 


As a buyer, you save yourself the heartache when you find your dream home only to lose it because you didn’t have a mortgage pre-approval in place at the time of placing an offer.   


Taking out a bank loan is a very big decision and often one that comes with apprehension and stress.  Team this up with the decision of which property to buy, which area to buy it in and how much to spend is a massive life event and generally the biggest life decision you will make.


So many buyers make the mistake of viewing and offering on a property without having a pre-approved mortgage in place. This only leads to delays and a seller not taking the offer seriously and ultimately ends in a competitive buyer purchasing the property.



**Benefits of you using a mortgage broker**


In order to get the best advice when making such a paramount decision, it is advisable to go through a mortgage broker. They have a wealth of knowledge, experience and are on hand to guide you through the process. They are also up to date with changes in interest rates with banks across the country and have upto date information about changes that are made and coming into play. 


To most people, two of the most valuable things in life are time and money, luckily by using a mortgage broker you can save on both! A good mortgage broker can potentially save you thousands in upfront costs and much more over the duration of the loan by investing time in you to pin point your needs and how best to suit them.”


As a result of the vast amount of business mortgage brokers put through the banks they have access to certain products and services which can save you a lot of money, including offers of zero processing fees with select banks and even reduced interest rates. 


A highly professional mortgage broker will speak to all the banks across the market on your behalf. If you were to go directly to the bank, they will only offer you their services, which might not be the best for you, resulting in you to trailing around different banks to find the best option. 


The existing relationships that the mortgage broker has built over time with the banks is extremely valuable when negotiating the best deal for you. They aim to make the process as hassle free and relaxed as possible.


Getting the pre-approval is only the first step in the mortgage process and there are plenty of hiccups that can occur along the way. Whether it could be amendments to a banks terms and conditions, a low valuation that needs to be challenged, a non-resident seller with no bank


account, troubles involving the NOC, liability letters expiring, or a multitude of other potential obstacles a mortgage broker will work closely with their in-house sales progression team to guide you through the entire experience and make sure your interests are protected at all times



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The Importance of a mortgage pre-approval in Dubai’s real estate market 

The UAE Central Bank’s move to raise rates will affect mortgage loans. For example; for every AED 1M borrowed, the increase in payment annually will be approximately AED 160 per 0.25% increase. If mortgage rates increase seven times this year, that's an increase of  AED 1,160 per AED1M borrowed - an increase of AED 2,320 for an AED 2M loan, so on and so forth. Luxury, high-end property buyers with loans upward of AED 7M, will be most impacted, which in turn may impact the upper end of the Dubai property market.


I predict we will see an increase in demand across the market as buyers look to speed up their buying process to lock their mortgage product, and therefore their monthly payments, in place now, before they increase. 


People who are sitting on the sidelines, or maybe thinking to purchase a property later in the year, may now come into the market sooner rather than later.



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An increase in interest rates

From the latest Federal Reserve meeting, we have learned that interest rates are not set to rise until at least 2024 and as the dollar is pegged to the Dirham, this will have an impact on lending here in the UAE. We know that interest rates are based on what happens in the economy, and the US will have milestones they want to hit in many areas, including employment and inflation. Once we see positive changes in these factors we’ll likely see a gradual rise in rates.


Whilst interest rates remain low, we predict we will continue to see increased spending in the real estate sector along with a rise in commercial lending for businesses looking to expand and capitalise on the new opportunities arising from the Covid-19 pandemic. As a result, we predict to see an increase in investors looking to build their property portfolio as rates should come down to around 3.5-4% rather than above 5-6% as seen previously. We could also see more businesses taking advantage of these interest rates and using the opportunity to buy their own offices and increase their asset size rather than renting.


In my opinion, rates will remain low for the next three to five years and this is a time to take advantage of these low margins. As well as the commercial market, the residential secondary resale market for ready properties will continue to rise as people take advantage of these rates and get mortgages paid down while the rates remain low. It has never been a better time to borrow money against a property in the UAE.



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What the latest Federal Reserve Meeting outcome means for the Dubai Real Estate Market

As we entered 2020, we came in with lots of pipeline and many clients to speak to after having a lot of enquiries towards the end of 2019. For the first quarter of the year we were already seeing increased activity in the market and then Covid-19 hit. We didn’t do any less business as a result of the pandemic to begin with, in fact, in March 2020, I had my record month since being in the mortgage industry in Dubai for the past fifteen years. However, as lockdown hit, things got difficult. During lockdown, people still wanted to buy properties but transactions were being held up as banks adapted to their new work from home regimes. This had a knock on effect on property deals as a whole and not only on mortgages. With pre-approvals being held up, contracts were expiring and putting both buyer and seller back to square one. We were still keeping busy because of the number of enquiries that were coming through from buyers so, fortunately, the team didn’t stop - processes were certainly slower than before but we still had the ability to reach out to our clients and have initial conversations. 


As Dubai slowly moved out of lockdown, no one was to know what was going to happen with the property market - we were headed into the great unknown but the government was quick to add stimulus by introducing lower interest rates and increasing the loan to value (LTV). I believe these were a staple in the success of the property market and we were soon to see prices rising in certain communities across Dubai. However, we saw certain industries struggle; aviation, events, hospitality and even banks were letting people go and most industries were issuing reductions in salary - all of the above having a huge impact on the ability to get a mortgage for many potential buyers. Allsopp & Allsopp were receiving mortgage enquiries from buyers but it boiled down to whether or not they would be eligible for a pre-approval as banks were emerging from lockdown very cautiously. Many banks tightened their credit checks for mortgage pre-approval and then went back to buyers' employers before issuing final approval to check if there had been any changes in salary, which, in some cases, there was which led to deals falling apart. It was very difficult to try and hold deals together when we also had to work on our pipeline and contact the influx of enquiries we were getting - a challenging time for mortgage consultants. 


Allsopp & Allsopp mortgage transactions were up 38% in 2020 compared to 2019 and had a 16% increase in first-time buyers from Q1 of 2020 compared to the rest of the year despite the pandemic and the lockdown and I believe this is down to the lower interest rates and higher LTV introduced by the government. People who had no problems with salary were finding themselves in a position to buy and with property prices being as low as they were in 2008, they were making the first step onto the property ladder. For example, in 2019 a property could be worth AED 2.5 Million with a down payment of 33% at AED 800,000, but in 2020 the same property could be purchased for AED 1.9 Million with a down payment of 22% at AED 400,000. Not only was it a lot cheaper, but clients were also paying less in upfront costs. This has led to a sudden influx of buyers in certain areas across the city and could be a factor in the increasing property prices. Allsopp & Allsopp reported an 8% increase in property prices across Dubai. 


In my fifteen years in the mortgage industry in Dubai, I have found that the real estate market follows a herd mentality. Once one person buys and talks about it, they get other people thinking the same and leading to them buying a property themselves, and so on. When it comes to investing money, with the pandemic still very much around, people feel safer putting their money into bricks and mortar - something they can benefit from by living in or renting out but ultimately, something they can physically see and touch. There are a lot of people still waiting to buy when the market price reaches the bottom - I always tell my client not to wait, but instead, to buy when the market is on the way down. If they wait, they’ll miss the bottom and before they know it, the prices are heading back up. We have seen this in certain communities in Dubai towards the end of the year! 


During the latter quarters of 2020, we did notice a lot more investors - Chinese investors in particular, enquiring about purchasing property in Dubai and looking into their finance options. In my opinion, as we move into 2021 and beyond, I think that more finance packages need to become available for overseas investors. The end-user market has benefited hugely from the stimulus package introduced by the government last year, I think it is now time to look into encouraging investors further and an attractive finance option to buy a home in Dubai would have an extensive effect on the property market and the city's economy. 



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Allsopp & Allsopp mortgage transactions up 38% in 2020 despite city-wide lockdown - here’s why

Buying a house is an emotional experience, throw in a foreign country with foreign processes and you have a stressful situation bubbling. 


It is so imperative to do due diligence before making one of the biggest investments of your life. You want to be approaching this life milestone full of confidence, excitement and a sense of conviction for the task in hand. 


It is advisable to get professional help from a trusted independent mortgage advisor who can aid you through the entire process from start to finish. The biggest commodities of life are time and money. Mortgage advisors can save you both! Mortgage advisors can often get exclusive rates which would not be available if you were to approach the bank directly. They will shop around a number of banks to find you the best option that fits your requirements saving you time. 


Before having a discussion with your mortgage advisor, it is important you know what you are able to borrow in the UAE.  If you are buying your first property as an expat for under AED 5M you can borrow up to 80% of the property value. If you are buying a property worth over AED 5M you can borrow up to 70% of the property value. For a UAE National the borrowing value is slightly higher; buying a property under AED 5M Nationals can borrow up to 85% of the property value and up to 75% of the property value when buying over AED5M. 


**Step 1 - Consultation**


After doing your own research and having a list of questions ready, it is time to contact a mortgage advisor for an initial consultation. Most advisors offer a free consultation and spend roughly 15 minutes finding out about your financial situation and your needs. During this consultation you should ask any questions you have. 


**Step 2 - Documents**


Once you are happy with your choice of mortgage advisor you need to send them all the documents that are required to start the pre-approval process: 


* Passport copies with visa page visible
* Emirates ID front & back.
* Salary certificate in original format addressed to ‘Whom it May Concern’ for initial approval.
* 6 months payslips if applicable.
* 6 months bank statements (internet copies will be suffice for initial approval)
* Latest credit card statement for all your cards.
* Details of existing liabilities (car loans/personal loans/mortgages).


Your mortgage advisor will go through this with you to make sure all documents fit the criteria before creating your file and completing your application form. Once you are happy with everything, your advisor will start the negotiation process with the banks. It usually takes the bank 2-3 days to get back with their initial queries. 


**Step 3 - Pre-Approval**


After the bank's queries have been addressed the Pre-Approval will be issued. This can take up to 5 working days. It is important to remember that a pre-approval will be valid for 60 days. 


**Step 4 - Final Offer**


You will now have found the home of your dreams and be ready to commit to a mortgage. Your mortgage advisor will need the property documents including the title deed, seller's passport and a floor plan of the property as well as the valuation fee and cheque. They will arrange a valuation conduction with the bank and thereafter it will take 5 working days to complete the final approval. 


**Step 5 - Transfer of Property**


One final step before you are a proud homeowner – the transfer of the property. If the seller of your property has remaining liability, your bank will pay this off and await the release of the original property documents. Your real estate broker or a sales progression team will closely oversee this entire process. Following this, we can proceed to apply for the No Objection Certificate (NOC) from the developer. Once the NOC has been delivered the property can be legally transferred from the seller to you, the buyer. 



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First Time Mortgage Guide 

Stuart Roe, Head of Mortgages talks to The Business Breakfast on dubaieye103fm about the increase in mortgage enquiries and his advice to buyers looking to get into the property market at the moment.



 Your browser does not support the audio element. 




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Mortgage Enquiries Causing Delays

We’ve stated that the property market has been moving fast since the covid-19 lockdown was lifted in Dubai but for one client, Chris, it moved faster than he had anticipated! 


![Mortgage consultation Main Phoho](https://strapiallsopp.s3.eu-west-1.amazonaws.com/Mortgage_consultation_Main_Phoho_a21453236b.jpg)  
Chris Ripley, a landlord who lives and works in DIFC had been contemplating switching mortgage lenders for some time and decided to reach out to our Mortgage Consultant [Ben Holliday](https://api.whatsapp.com/send?phone=9710505013012&text=Hi%20Ben%2c&source=&data=&app_absent=) to get some advice. After a whisper of considering he may sell the property, Ben put him in touch with our senior sales consultant who specialises in the area, [Euan Craigie](https://api.whatsapp.com/send?phone=9710564866695&text=Hi%20Euan%2c&source=&data=&app_absent=). 


![Mortgage consultation Chris Ripley](https://strapiallsopp.s3.eu-west-1.amazonaws.com/Mortgage_consultation_Chris_Ripley_1bbddf8384.jpeg)**Chris Ripley, seller**


Chris says “Ben was very professional and gave a very in depth perspective on the options I had available to me. When I mentioned that I had considered selling the townhouse, he was very understanding and asked if he could get the sales agent to call me and have a chat. I felt that Ben had my best interests at heart and truly listened and was happy to have an open conversation, even if that did mean passing my details onto another department.” 


On receiving the clients details Euan called him almost straight away to get a better understanding of his needs and to determine whether any of the buyers the team were working with would be interested. 


Chris continues “When Euan called me I was impressed with his knowledge of the area. He knew exactly where my villa was from my description and could even tell me which view it had! He said he knew a client who would be very interested and we arranged a viewing for the same day. By that evening I had an offer, I couldn’t believe it!” 


As soon as Euan determined the townhouse location, he knew exactly the client who would be very interested, a client who was working with his colleague, [Craig Andrews](https://api.whatsapp.com/send?phone=9710556284413&text=Hi%20Craig%2c&source=&data=&app_absent=) and who had a sale fall through due to the Covid-19 pandemic and a salary decrease halting his mortgage pre-approval. 


Mirko De Siena, buyer of the JVT townhouse says “My partner and I have had a rollercoaster of a year, we had been looking for a property in JVT when we started our search but ended up signing contracts for a lovely property in The Springs but I always had this nagging feeling that I preferred JVT. Unfortunately, the house sale fell through because I received a temporary salary cut as a result of the Covid-19 pandemic. We were hugely disappointed at the time and it was very stressful, however, we called our agent, Craig, who was hugely supportive as always and he reassured us that when the time was right, he would find us a perfect home. 


He kept his promise, when we saw the townhouse in JVT surrounded by greenery and with a view of the park we were truly delighted. It actually took my breath away as it was exactly what we had in mind when we first began our search and to make it that little bit sweeter, Stuart, our mortgage advisor (Stuart Roe, Head of Mortgages) advised us that we were eligible to apply for a mortgage lending 80% - an extra 5% from the mortgage we had initially applied for with the previous property.” 


“Another positive is that we will be paying less for our mortgage than we would be paying on our rental apartment in Marina. Buying a property has been on our agenda for a while and although we’ve had a rough ride getting there, we always felt supported and in good hands with Craig and Stuart. Everything worked out for us in the end and we are extremely excited to start our new chapter in our dream home.” 


Chris Ripley concludes “I’m very grateful to the Allsopp & Allsopp team for jumping into action and making the sale process extremely quick and easy. I have reached out to them already to find me a new apartment on the Palm with some outdoor space after realising my apartment in DIFC without a balcony is just too small after being confined during the lockdown” 



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From a mortgage consultation to a property sale in 36 hours 

**Are mortgage rates more favourable right now?**


I have been in the mortgage industry in dubai for 14 years and I can say that Dubai mortgage rates are more favourable now than I have ever seen them. Fixed rates are now lower and variable margins are also lower and the same can be said for most of the banks that impose floor rates.


![Stuart Roe Head of Mortgages](https://strapiallsopp.s3.eu-west-1.amazonaws.com/Stuart_Roe_Head_of_Mortgages_535834d246.jpg)  
**Is it a good idea to renegotiate your mortgage? What are the pros and cons?**


It is a very good time to renegotiate your current mortgage because the choices are better than they were when they initially took out the loan - closure fees are now capped at AED 10,000 or 1% whichever is lower so there is a chance there will be considerable savings over time. The downsides of switching mortgage lenders are that some people may not be able to leverage their position if their outstanding amount is less than 75% of their value, also the costs to close and move to another lender with the registration fees are quite challenging for some.   
   
**Is buying real estate a good idea right now?**


The price of real estate is very attractive, Dubai mortgage rates have never been lower and loan percentages have never been higher. In my opinion I’d personally say it's a good time to get into [buying a property in Dubai](/dubai/properties/sales) if you’ve considered all the other factors; job security, salary cuts and time planning to stay in the UAE. Buying a property in Dubai is a long term prospect and should be carefully considered before making the decision and I would always advise buyers to take professional advice from both industry professionals with effective and long standing experience or close friends that are accomplished buyers in the UAE market.   
   
**What if you lose your job? What happens to the mortgage?**


It is important for buyers to consider all circumstances before locking themselves into a mortgage such as job losses. There are long term plans and measures that buyers should look into. Certain insurances can be entered into in case of loss of earnings or such like but this can be quite expensive for someone getting into the market, other people would consider the proposition of having to rent the property out if the situation was ever required and match the payments to the market conditions and have options to pay overpayments through the term with no charge.  
   
**What are the new beneficial changes for mortgages?**


The new initiatives for first time buyers with an 85% mortgage for Emiratis and 80% for expats really helps with people that were looking between the difference of affording a place to live and the home they truly desire. This higher loan to value along with the reduced longer fixed rates and lower fees to [getting a mortgage in dubai](/dubai/mortgages) is a great initiative in helping people get on the property ladder, and, in turn, moves the bottom of the market to enable existing owners to up sell and improve their current property to a larger plot or a different area.  
   
**What about declining real estate prices, instability etc.?**


In all honesty we’ve not really had any issues with fluctuating prices, property seems to be neither up or down across many areas throughout the Covid-19 pandemic, although maybe a few pockets of communities further out of town are being affected or people are prepared to let properties go for less than market value for different reasons. Again, do your homework.  
   
**Have mortgage applications risen?**  
  
We have seen a healthy incline in mortgage enquiries since the back end of 2019 in terms of applications however, naturally there were less applications last month due to the sterilisation process 24hour restrictions. That being said, we have seen applications increase since the relaxed curfew conditions where people can now get back out and view properties. It’s important to note that currently there are emergency measures that are helping people to get into properties now and they may not be around for a long time and it's best to take advantage of ‘now’ if you’re serious about buying a property.  
   
**How many people are renegotiating their mortgages?**  
  
In general, there are a lot of people trying to renegotiate their mortgage with their existing lenders for multiple reasons, lenders may be more susceptible to negotiating terms rather than deferring payments at the moment.   
   
**What have been the effects of Covid-19 on the mortgage market?**


Generally Covid-19 has affected people getting out to physically view properties, [property valuations](/dubai/valuation/book-a-valuation) haven’t been able to take place and sellers and buyers may not be able to enter the country to do transfers. The lifting of restrictions, slight as they are, has seen a lot of those hurdles overcome but its still having an effect on the overall mortgage market to a degree.   
   
**How do central bank interest rate cuts affect mortgage rates?**


The Central Bank interest cuts has enabled banks to offer longer lower fixed rates and people who are on variable rates will also have seen a decline in their monthly payments for the most part. Interbank rates have risen a little over the lockdown due to large withdrawals from clients looking to release funds, this will come down now as people trust their money not to be tied up and more people switch to contactless/cashless transactions.  
   
**What do you think the future holds?**


We have a number of enquiries ongoing currently where people are interested in the higher loan percentages, we don’t normally recommend getting approvals for anything too far in advance as the market can change and approvals have a validity date. We go through a basic underwriting to give potential clients an idea of what their borrowing potential is and keep them updated with new products and rates as we get them from lenders. Some clients who may have been looking for future purchases have been inclined to buy something now with a tenant vacating in the future to take advantage of the current rates and products and also get a rent rebate to be able to pay for the mortgage payments ready for when they are able to move in sometime in the future.



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Is now the right time to apply for a UAE mortgage?


Stuart Roe, Head of Mortgages talks about the 0.5% cut in interest rates by the Central Bank and his thoughts on how this will affect the Dubai property market.⁣



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Mortgage rates in the UAE - Allsopp & Allsopp Mortgage Services

Mortgage Explainer


We all know that a mortgage is a loan taken from the bank to pay for a property, but for most of us, this is where our knowledge of mortgages begins to diminish.


When the plans of buying your first home edge nearer, you may find yourself having a play around on bank’s online mortgage calculators and finding out what your initial mortgage repayments will be. Then you jump onto a property portal and see what properties are within your reach – all very exciting!


As the dream of your ableness to step foot on the property ladder is starting to become a reality, the research into a mortgage truly begins. You will come across terms such as fixed rate, variable rate, bank margins and EIBOR (Emirates Inter Bank Offer Rate) and you will begin to try and understand what these mean to you.


You can have meetings with different banks and listen intently as they talk you through their competitive rates and the benefits you receive whilst taking a mortgage through them, or you can have an open and honest chat with an independent [mortgage advisor in Dubai](/dubai/mortgages).


These initial meetings can be rather overwhelming, and it becomes very easy to sign up to a mortgage because you have been convinced it’s the best deal without understanding what the repayments, insurances, processing fees and [early settlement fees](/dubai/about-us/news/1139-uae-central-bank-removes-3-early-settlement-fee-for-mortgages) really mean and how they can affect you.


This is a common mistake that many first-time home buyers make when [getting a mortgage in Dubai](/dubai/about-us/news/450-why-getting-mortgage-pre-approval-before-buying-is-beneficial). An independent mortgage advisor in Dubai is the best way forward when you are trying to get your head around borrowing the largest amount of money you’ve borrowed in your life!


An independent mortgage advisor in Dubai who is seasoned in the market will already have preferential rates set up with a number of banks. They can tailor a quote entirely revolved around your circumstances and explain exactly what you will be paying, what the fees are and where you can save thousands of AED.


To understand the mortgage process, it is easier to see it as a chain. The bank will borrow money from the Central Bank who work using EIBOR, banks then add their own profit margin which is combined with the EIBOR rate as a variable rate to charge to clients after their attractive fixed rate is complete.


![Mortgage Explainer Allsopp 1](https://strapiallsopp.s3.eu-west-1.amazonaws.com/Mortgage_Explainer_Allsopp_1_771a7b0f12.png)


The most important part of the mortgage choosing process is understanding what the rate will be when your fixed rate changes to a variable rate. Many banks will entice clients with a very attractive fixed rate over 3 years for example, but when they add their own profit margin to the EIBOR, the variable rate can often become a lot higher than the previous fixed rate. You will be paying a variable rate for the majority of your mortgage which, in many peoples opinion makes the bank margin the most important rate to look at before signing a mortgagecontract.


Take a look at the comparison below for a 20-year mortgage borrowing 75% of anAED 2,500,000 property as an example:


![Mortgage Explainer Allsopp 2](https://strapiallsopp.s3.eu-west-1.amazonaws.com/Mortgage_Explainer_Allsopp_2_e9843505f0.png)


On top of the follow-on bank margin, you must also be aware of the processing fees which can be anywhere from 0.5% to 1% of the mortgage value.



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What to Look Out for When Choosing a Mortgage in Dubai

Operations Director Paul Kelly speaks live on the Business Breakfast Show. Results from our Q3 report show that cash buyers are on the rise. Hit the play button to find out more.




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Increase in cash buyers

Banks can only charge borrowers a maximum of 1% or Dh10,000, whichever is less, on the outstanding amount that charged customers 3 per cent early settlement fees will be required to give a refund within 30 days. Pawan Singh / The National Banks


![Allsopp Allsopp UAE Central Bank](https://strapiallsopp.s3.eu-west-1.amazonaws.com/Allsopp_Allsopp_UAE_Central_Bank_ace618b411.jpg)


The UAE Central Bank removed the 3 per cent early settlement fee for mortgages introduced last year and reverted to a 1 per cent, or Dh10,000, cap as part of a series of moves aimed at easing home loan rules.


A maximum age requirement, which stipulates that loan holders must be under 70 before their last repayment is due, was also lifted by the central bank, according to a statement released on Thursday. Age requirements will now be set by lenders directly.


“We have carefully considered the feedback that we have received from bank customers across the UAE, and have acted swiftly to address and resolve their concerns," the central bank's governor, Mubarak Al Mansoori said.


"These amendments are designed to ease requirements of mortgage loans and will be applied with immediate effect," he added.


A circular sent to lenders this week states that “the early settlement or partial settlement fee applying to home loans has been reverted to maximum 1 per cent of the outstanding balance or Dh10,000, whichever is less”.


Furthermore, “banks and finance companies that arbitrarily changed the stated terms of the fees in existing customer agreements” are required to refund these amount to customers within 30 days from the notice.


“The news from the central bank is positive as it now opens up opportunities for those borrowers who were paying a higher rate of interest on their mortgage to find a better deal and save money,” said Chris Schutrups, managing director of Mortgage Finder.


The introduction of the 3 per cent cap for early settlement for home loans was part of a central bank overhaul in June last year to help curb lending. An amendment updating changes issued in February 2011 listed 43 capped fees on retail consumer-related banking services. Some were beneficial to borrowers, while others introduced added costs.


The 3 per cent fees made it expensive for home buyers to change to another lender, effectively locking them in even when a lower rate was on offer. Reverting to the lower cap will allow borrowers to seek more competitive mortgage rates.


“The recent interest rate cuts that we have seen are pushing banks to be more competitive with their products. We have seen a decrease in mortgage rates since the beginning of the year,” Mr Schutrups said. “All of this is great news for those borrowers who were stuck with mortgage products that did not reflect the changing market.”


The rule change on early settlement fees "provides a more competitive landscape across the mortgage sector", said Stuart Roe, head of mortgages at property broker Allsopp & Allsopp.


"Owners that have been trapped with high interest rates, with no ability to find other products because of the 3 per cent penalty imposed, now have the freedom to look elsewhere for the best rate.


"For example, if a borrower has an outstanding mortgage amount of Dh2.5 million, historically they would have paid Dh75,000 on top of other charges to switch lenders, whereas with the reduction they will now pay Dh10,000," Mr Roe added.


***The National, October 11th 2019, Nada El Sawy***



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UAE Central Bank Removes 3% Early Settlement Fee for Mortgages

##### Once we see movement in first-time buyers, we will see a domino effect through the market with a lot more activity, positivity and confidence.” Lewis Allsopp, CEO of Allsopp & Allsopp.


[https://gulfnews.com/business/property/low-ltv-ratio-a-tough-barrier-for-homebuyers-1.64219568](https://gulfnews.com/business/property/low-ltv-ratio-a-tough-barrier-for-homebuyers-1.64219568 "https://gulfnews.com/business/property/low-ltv-ratio-a-tough-barrier-for-homebuyers-1.64219568")


![Lewis Allsopp Chief Executive Officer](https://strapiallsopp.s3.eu-west-1.amazonaws.com/lewis_allsopp_chief_executive_officer_41157d8834.jpg)


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Low LTV ratio a tough barrier for homebuyers

##### You begin your search to buy your dream home by browsing online through property portals at houses for sale in your favourite areas of Dubai - this, of course, is a good starting point, however, are you looking within your budget?


![mortgage preapproval allsop allsop](https://strapiallsopp.s3.eu-west-1.amazonaws.com/mortgage_preapproval_allsop_allsop_10da03c56a.jpg)
The importance of securing a mortgage pre-approval before beginning the search to buy a property is imperative. Even if it may seem premature wouldn't you like to know exactly how much money you have to play with and not get your hopes up by looking in areas well above your budget, or perhaps the opposite - you have a larger budget than you first thought.


**Benefits of getting a pre-approval**


The benefits of a pre-approval are undoubtedly endless and essential for home hunters. If you already have a pre-approval in place, you know your affordability when beginning your property search. You have solid knowledge in place of what fees are expected upfront and be clear on how much cash you will need to complete a transaction. Additionally, you will know how much your monthly repayments will be so giving you confidence when communicating with agents and negotiating with sellers.


As well as this, when the right property comes along, you are in the best possible position to make an offer. You are ready to take the next step and avoid lengthy delays if you were to then approach a bank to start the pre-approval process.


The advantages of a pre-approval are also of many benefits to sellers. A seller will appreciate the readiness of the buyer when an offer with a pre-approval is presented. If you are a seller, you don't only look to get the best price for your property but want to make the process of selling as simple as possible for yourself and the buyer. A buyer with a pre-approved mortgage is ideally the perfect patron for you.


As a buyer, you save yourself the heartache when you find your dream home only to lose it because you didn't have a mortgage pre-approval in place at the time of placing an offer.


Taking out a bank loan is a very big decision and often one that comes with apprehension and stress. Team this up with the decision of which property to buy, which area to buy it in and how much to spend is a massive life event and generally the biggest life decision you will make.


So many buyers make the mistake of viewing and offering on a property without having a pre-approved mortgage in place. This only leads to delays and a seller not taking the offer seriously and ultimately ends in a competitive buyer purchasing the property.


**Benefits of you using a mortgage broker**


In order to get the best advice when making such a paramount decision, it is advisable to go through a mortgage broker. They have a wealth of knowledge, experience and are on hand to guide you through the process.


To most people, two of the most valuable things in life are time and money, luckily by using a mortgage broker you can save on both. A good mortgage broker can potentially save you thousands in upfront costs and much more over the duration of the loan by investing time in you to pinpoint your needs and how best to suit them.


As a result of the vast amount of business mortgage brokers put through the banks, they have access to certain products and services which can save you a lot of money, including offers of zero processing fees with select banks and even reduced interest rates.


A highly professional mortgage broker will speak to all the banks across the market on your behalf. If you were to go directly to the bank, they will only offer you their services, which might not be the best for you, resulting in you to trailing around different banks to find the best option.


The existing relationships that the mortgage broker has built over time with the banks is extremely valuable when negotiating the best deal for you. They aim to make the process as hassle-free and relaxed as possible.


Getting the pre-approval is only the first step in the mortgage process and there are plenty of hiccups that can occur along the way. Whether it could be amendments to a banks terms and conditions, a low valuation that needs to be challenged, a non-resident seller with no bank account, troubles involving the NOC, liability letters expiring, or a multitude of other potential obstacles a mortgage broker will work closely with their in-house sales progression team to guide you through the entire experience and make sure your interests are protected at all times.



Why getting mortgage pre-approval before buying is beneficial

##### Dubai mortgage lender Amlak Finance said on Thursday that all its creditors had approved a plan to restructure its debt, bringing to a close protracted talk over the last major hangover from the emirate's property market crash of 2008.


![e303e2027514497aaa0603a129a3eb42 L](https://strapiallsopp.s3.eu-west-1.amazonaws.com/e303e2027514497aaa0603a129a3eb42_L_d8e9016a8a.jpg)
Twenty-eight creditors had been seeking a deal with the Islamic lender, which had its shares suspended from trade on the Dubai Financial Market in November 2008 as the crash ravaged its finances.


Amlak, in which Dubai's biggest developer Emaar Properties owns a 45 percent stake, did not give the size of the debt being restructured, but bankers have estimated it at about $2.7 billion.


"The Committee expects the restructuring to be completed and fully implemented in 2014, allowing Amlak's shares to be re-admitted for trading on the DFM in early 2015," the company said in a statement.


Amlak said it would shortly make an initial payment to creditors of approximately AED2 billion ($545 million), with the remaining debt to be paid over a 12-year period.


As part of the deal, creditors will swap approximately AED1.4 billion of their original debt into a "convertible instrument" which is to be fully redeemed over the next few years as Amlak sells some real estate assets whose values have appreciated, the statement added. Amlak declined to give further details of how the convertible instrument would work.


The firm would also repay over a six-year period liquidity support funds provided by the United Arab Emirates government. It did not reveal the size of that support.


A six-member creditor committee, including commercial banks such as Dubai's Emirates NBD and Standard Chartered as well as two government funds, handled the talks with Amlak. Thursday's deal was in line with a proposal to creditors that the company revealed in July this year.


Dubai's property sector has rebounded strongly in the past two years, with the prices of some properties returning to 2008 levels. This has improved the fortunes of Dubai state-linked entities which did debt restructuring deals after the crash.


Property developer Nakheel said in June that it would repay all its outstanding debt to creditors, worth about $1.5 billion, by August this year, four years ahead of the schedule set by its restructuring plan.



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