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

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
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 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 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 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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