Buying a home is a dream for almost anyone. In our day and age, this primary wish/dream is being fulfilled by the ‘home loans.’ It’s helping the ‘young’ buy the property of their choice in a location of their choice.
As beneficial as they are, one needs to know the exact rules and regulations defining the home loans to reap the maximum benefits. If you are planning to buy a home in the UAE, know these facts first you opt for a home loan to finance your dream. There are two types of home loans available in the region – Conventional Mortgages and Shariah-compliant home finance options. Both are common enough options and people opt for either depending on their preference, meeting eligibility criterion or ease of getting that loan.
The Eligibility Criterion
Yes, if you have a monthly salary of Dh 20,000 in the UAE, then you can take the loan as you meet the salary requirement for 84 percent of home loans available in the market. Almost, 57 percent of the loans are available for those earning between Dh10,000 to Dh20,000 and 27 percent for those earning Dh10,000 or lower per month.
The eligibility also depends on factors such as if your firm is listed or not, minimum length of service, and other such criterion. Though there is no hard and fast rule regarding the listing criterion, yet 89 percent of all home loans are given out to those who are actually working for firms which are on the banks’ approved employers list.
Interest Rates and the Fees
Home loans are offered at reduced rates of three to four percent, and only 11 percent of all home loans are given out at rates lesser than that. Those rates are 2.94 to 2.95 percent, operational on reduced balance. Mortgage repayments are calculated on the basis of the mortgage calculator.
Also, in the home loans, it’s not always the interest rates that you need to pay. There are other one-time charges too. These include the arrangement fee, valuation fee, property insurance/takaful, life insurance/takaful, early settlement fee, etc. Arrangement fee is 1 percent, valuation fee depends on the valuation of the property and could be Dh2,500 to Dh3,000 for most banks. Property insurance is 0.03 to 0.06 percent of the total value of the property, life insurance fee is 0.35 percent at most of the banks and if you are keen on settling the loan early, then the fee is usually 1 percent of the outstanding dues on that mortgage, and is a maximum of Dh10,000 as per the banking regulations.
Available for all types of properties, popular being the under-construction ones and most banks have their list of approved projects and builders. The rates that apply are fixed or variable rates, each with their own set of advantages and problems and it is a matter of personal choice when it comes to the type of loan.
So, are you clear on the basics at least? Visit a bank and get acquainted or better still –