Take home loan, get free goodies

The UAE mortgage providers are battling it out to win customers.

Banks and financial institutions are not just waiving off valuation fees or insurance charges, some are going to the extent of offering white goods as freebies to lure customers.

Dubai Land Department data has revealed that Dh17.8 billion or 40 per cent of the total property transactions in the first quarter 2013 were done through mortgages. Besides, there is a likelihood that the UAE Central Bank may introduce new mortgage cap by second half of the year and hence banks are looking to lure customers

Home loans are currently available for 3.99 per cent fixed for three years or 4.99 per cent fixed for five years. Ajman Bank continues to offer 2.99 per cent, the lowest in the market, for the first year.

A new offer from Independent Finance, a mortgage consultant, states that a prospective buyer can now avail of 85 per cent finance (which means only 15 per cent down payment), no title deed requirement, 3.99 fixed for one year and 4.99 fixed for two to five years, free valuation, free insurance and free white goods.

On its website, Ajman Bank says mortgage is available for UAE nationals and residents with a minimum down payment of 10 per cent and 15 per cent, respectively. Finance is available of ready and under construction properties for UAE nationals, while expats will get only for ready properties. There will be no early settlement fee after three years with waiver of processing fee in buyout cases.

Abu Dhabi Islamic Bank is offering an optional fixed pricing for five years at five per cent with 85 per cent LTV for salary transfer customers. The bank states on its website that it will not be charging early settlement fees.

--Banks getting aggressive

“Yes banks are getting more aggressive in selling, but their underwriting is still very conservative. Hence, don't expect any of those subprime type deals happening anytime soon,” Sam Wani, General Manager, Independent Finance, told Emirates 24/7.

Although most products are geared for end-users, Wani believes that investors looking for multiple mortgages will struggle to find a deal.

A Hadef & Partner legal firm report said last year that investors felt interest rates in the UAE were high in the UAE and that more central bank intervention might be required to regulate how and when banks charge fees or alter contractually agreed interest rate calculation mechanisms.

“Average rates now are less than five per cent. These are low compared to other merging economies where rates are 8-12 per cent, but compared to rates in developed economies these are higher,” Wani had said.

Experts say the higher LTV ratios that the banks are now offering is one indication of the increased interest in real estate lending in Dubai and an effort to get more customers to sign up before the UAE Central Bank introduces a mortgage cap.

--New mortgage cap by second half

Emirates Banks Association, the trade body representing banks in the UAE, has already proposed maximum home loan tenure of 25 years for expatriates with maximum funding of up to seven years’ salary or total income.


It proposed a 75 per cent LTV for expats and 80 per cent for UAE nationals for the purchase of a first house, and 60 and 65 per cent LTV for expats and UAE nationals for second and subsequent houses The maximum financing amount proposed was eight years’ salary or total income for UAE nationals and up to seven years’ salary or total income for expatriates.

Follow Emirates 24|7 on Google News.