How to Do Mortgage Advisory Services in Dubai?

A real estate mortgage is a legal agreement where a borrower (typically a property owner) pledges real property to a lender as security for a loan. This arrangement allows the borrower to receive funds upfront, usually to purchase or refinance real estate, while the lender obtains the right to take possession of the property if the borrower fails to repay the loan according to the agreed terms.

Key elements of a mortgage include:

• Mortgagee and Mortgagor: The lender is called the mortgagee, and the borrower is the mortgagor.
• Loan Principal: The amount of money borrowed by the mortgagor, which is typically paid back with interest over a specified period.
• Interest Rate: The cost of borrowing money, expressed as a percentage, that the borrower must pay on top of the principal amount.
• Repayment Terms: This includes the schedule (monthly, bi-monthly, etc.) and duration (e.g., 15, 20, or 30 years) over which the loan must be repaid.
• Foreclosure: If the borrower defaults on the loan (fails to make payments), the lender can initiate foreclosure proceedings. This allows the lender to sell the property to recover the outstanding loan amount.
• Types of Mortgages: There are various types, including fixed-rate mortgages (where the interest rate remains constant), adjustable-rate mortgages (where the interest rate can change over time), and government-backed mortgages (e.g., FHA loans in the United States).
• Legal Documentation: A mortgage is documented through a legal contract that specifies the rights and responsibilities of both parties, including conditions under which the lender can enforce its rights to the property.

Real estate mortgages are fundamental in facilitating property ownership and investment by providing a mechanism for individuals and businesses to access large sums of capital while securing lenders against the risk of default through collateral.

Mortgage Products & Services

• Primary Market Deals:

  Primary market deals are loans booked for homes purchased directly from a developer and mortgaged to a bank to finance the transaction.

  
  

  If the property's development is complete and ready for occupancy, the loan is fully disbursed upon receipt of the lien instrument from the lands department/developer. If the property is purchased off-plan, money are disbursed in accordance with an agreed-upon payment schedule, which is typically connected to building milestones.




• Secondary Market Deals:

  Secondary market deals are loans made to aid the purchase of a property from an existing individual or business that owns it.

  
  

  If the present owner has an existing mortgage on the property, the buyer's bank pays off the seller's mortgage loan first, and then the title is transferred to the purchaser.

  
  

  Any extra money after the seller's bank's dues have been settled is paid to the seller at the time of title transfer.




• Pre-Approval Process:

  A lender's practice of approving a borrower for a certain loan amount, allowing prospective house purchasers to shop with the knowledge, which is likely to be shared with a seller and broker to demonstrate their financial capability, prior to identifying the property to be mortgaged.




• Residential Mortgages:

  - First time home buyers

  • First-time home purchasers with a property worth of up to 5 million dirhams can borrow up to 80% if they are UAE citizens and 75% if they are expats or non-residents.
  • This criteria is identical for Islamic financing and conventional mortgages.

  - Second time home buyers

  • Second-time home buyers can borrow up to the property value of five million dirhams. If they are UAE nationals, they can borrow up to 65% of the property's worth, whereas expats or non-residents can borrow 60%.

Important Documents

• Salaried Employee Customers:

  The following documents must be submitted by the consumer when applying for a house mortgage.

  The bank may demand additional papers, which will be disclosed to the consumer as needed.

  • Salary certificate, addressed to the bank.
  • Copy of the passport, visa, Emirates ID, and Khulasat Al Qaid (if applicable).
  • 6 months' bank statements for all accounts in the UAE.
  • Last six months' pay stubs (if relevant).
  • Current credit card statement for all active cards.
  • Information on current loans, if any.
  • Signed Etihad Bureau authorization (given by the bank).
  • Application form.




• Self employed Customers:

  The following documents must be submitted by the consumer when applying for a house mortgage.

  The bank may demand additional papers, which will be disclosed to the consumer as needed.

  • Copy of the passport, visa, Emirates ID, and Khulasat Al Qaid (if applicable).
  • A valid copy of the business's trade license.
  • A copy of the company's MOAs, including any amendments and share certificates.
  • Two years of audited financials.
  • Six months' bank statements for all company and personal accounts in the UAE.
  • Offer / facility letters, if any loans and facilities availed by the company.
  • Current credit card statement for all active cards.
  • Information on existing loans, if any.
  • Signed Etihad Bureau authorization (given by the bank).
  • Application form.
  • Company profile.

Important Details

• Insurance / Takaful:

  Banks in the UAE demand that mortgage loans be insured. Most banks require that the insurance be obtained from the bank itself, while others allow clients to assign their current insurance to the bank for the duration of the loan as long as it fits specific criteria. The primary types of compulsory insurances are as follows:

  • Life Insurance

    This is a life insurance policy that covers the borrower's loan amount for the duration of the facility. This assures that in the event of the borrower's death, the insurer settles the borrower's liabilities to the bank and hands over the property title free of encumbrance to the client's inheritors after necessary legal proceedings.

  • Property Insurance

    This is a property insurance policy that covers reinstatement costs up to the maximum amount of the property's worth if it is damaged by external sources or structural component failure.




• Property Insurance / Takaful:

  Banks in the UAE demand that mortgage loans be insured. Most banks require that the insurance be obtained from the bank itself, while others allow clients to assign their current insurance to the bank for the duration of the loan as long as it fits specific criteria. The primary types of compulsory insurances are as follows:

  • Life Insurance

    This is a life insurance policy that covers the borrower's loan amount for the duration of the facility. This assures that in the event of the borrower's death, the insurer settles the borrower's liabilities to the bank and hands over the property title free of encumbrance to the client's inheritors after necessary legal proceedings.

  • Property Insurance

    This is a property insurance policy that covers reinstatement costs up to the maximum amount of the property's worth if it is damaged by external sources or structural component failure.




• Property Valuation:

  To estimate the value of the property, the valuation will take into account its location and condition, as well as recent transactions of similar property.




• AECB - Al Etihad Credit Bureau:

  Al Etihad Credit Bureau is a Public Joint Stock Company owned entirely by the UAE Federal Government. According to UAE Federal Law No. (6) of 2010 Governing Credit Information, the company is required to collect credit information on a regular basis from financial and non-financial organizations throughout the UAE. Al Etihad Credit Bureau collects and analyzes this data to calculate Credit Scores and Credit Reports, which are then made available to UAE residents and businesses.

  The Credit Report enables banks and financial institutions to make more informed decisions and process mortgage applications more quickly because it contains all financial information, including credit card, personal loan, check, and utility bill repayment history. Before pulling a report from the AECB, banks must get the customer's authorization. To preserve good standing, you must pay your loan, credit card, and utility bills on time.




• Finance Amortization Details:

  All mortgage loans in the UAE follow a normal amortization scheme, with interest/profit charged on a monthly diminishing balance. Payments are equal and normally charged monthly; however, central bank regulations allow for a maximum repayment period of three months (quarterly payments).

  The monthly installment payment for your home financing consists of two main components: capital repayment and interest/profit payback. Every installment payment reduces your outstanding capital, and a portion of the annual interest is recovered proportionally in that month.