My husband and I took a joint mortgage to fund a property purchase in the UAE in 2019. The mortgage was worth Dh1.5 million ($408,440).
Unfortunately, my husband passed away a few months ago in an accident. Although I work and earn a monthly salary of Dh15,000, I am unable to keep up with the mortgage monthly instalments of Dh10,000.
I have not missed any loan instalments as yet since I could pay it after gaining access to my husband’s end-of-service dues. However, that amount will soon run out and I will be left to fend for myself.
I live in the property along with my son, a maid and a dog. I also have to pay my son’s school fees, property service charges and other miscellaneous living expenses every month. When my husband was alive, we shared the costs, so it never proved to be a burden. That is not the case now.
The value of the property has declined, so even if I choose to sell the asset now, it won’t be profitable. Will the bank consider my request for a lower loan instalment on humanitarian grounds?
My husband did not have any other debts and neither do I. What do you advise? VS, Dubai
Debt panellist 1: Sameh Awadallah, acting global head of retail banking at Abu Dhabi Islamic Bank
Please accept my heartfelt condolences on the loss of your husband. May you find the strength to face your financial challenges during this difficult time.
There is a lot being done to protect vulnerable individuals, given these unprecedented circumstances. As a first step, notify the bank that the mortgage co-signer has died and check if you have mortgage life insurance, which can cover your outstanding loan balance.
You can also negotiate with the bank to refinance the mortgage, given your extenuating circumstance and stable salary.
You should maintain communication with your bank and push to talk to a more senior person with actual decision-making authority.
Talk to other banks as well since you have quite a reasonable salary. They may be willing to take on your debt if you move your salary to them, as well as offer you a better rate and/or a longer term for the mortgage.
Given that you have lost your second source of income, try your best to reduce your spending as much as possible.
Living with significant debt can certainly be distressing. Therefore, if you have any friends or family who may be able to support you, now is the time to contact them.
Debt panellist 2: Jaya Ratnani, managing partner at Freed Financial Services
Our deepest condolence to you and your family for such an unbearable loss. Managing your finances in such a turbulent time must be difficult, being the sole provider for the family.
While availing of a home loan, life insurance is mandatory by all banks in the UAE. The life insurance policy should pay out the mortgage in case of death so that the family can be secured and can own the property without having to worry about mortgage payments.
The insurance premiums are either built in to your monthly instalment, can be annual or a lump sum amount taken by the bank when the loan commences.
Based on each bank’s group policy, you should be able to claim fully or partially for your husband’s death. It would be best if you can approach the bank to understand the type of policy and the provider associated with your home loan.
You will need to visit the bank and provide a copy of your husband’s attested death certificate so that the bank can open a claim with the insurance provider.
In the event the insurance covers the total outstanding loan amount, you will need to provide the Dubai courts an heir certificate to release the asset and transfer the property in your name.
In case the insurance claim does not cover the complete loan outstanding amount, it is recommended that you request the bank for a restructure based on your current income before the end-of-service amount is depleted.
Ensure you have all the proof available when discussing with the bank such as your salary certificate and bank statements. Banks can reschedule the interest and principal payments depending on your eligibility criteria.
Alternately, you can also take the help of debt management companies who can file the insurance claim and negotiate on your behalf for the best restructuring plan with the bank.
Debt panellist 3: Alison Soltani, founder of Leap Savvy Savers
First, and most importantly, I am sorry for your loss. All things considered, you have done incredibly well to keep everything afloat until now.
You have access to your deceased husband’s end-of-service payment. Have you also confirmed whether he has any assets or savings either in the UAE or in another country, or a will, which could entitle you to further inheritance? It may be worth seeking legal advice and speaking to family members to see if this might be the case.
The next thing you could check is insurance policies. When taking out a mortgage, it is compulsory to take out life and home insurance. Read through the policies or call the provider to verify whether there is mortgage protection insurance, which could provide you with a payout.
In terms of negotiating a lower monthly repayment, contact the relationship manager of the bank and explain your situation. You can ask whether they will remortgage for a longer term or if they have any lower interest rate deals. They may also offer a payment holiday considering your circumstances.
This will give you a chance to consider your options without the immediate stress of incoming bills. In addition, speak to a mortgage broker about what options could be available to you from different lenders and banks.
You can apply to charitable organisations such as Dar Al Ber by emailing email@example.com or Beit Al Khair by calling 800 22554 for financial support. They may ask for documents such as a death certificate and bank statements. While there is no guarantee they can help, as they receive many cases, it is an option.
With regards to your overall situation, financial stress will be adding a huge burden on what is already a very challenging time. If after going through these steps, you are still struggling to pay your monthly bills, you may benefit from thinking about making bigger changes to your life.
These could include applying for jobs with a package, which includes school fees, or renting out your house and moving to a smaller property. The rental income should cover your mortgage and property maintenance, alleviating a large monthly bill for you.
Finally, you mentioned that when your husband was alive, you shared the costs of your lifestyle. Now may be the time to think about fundamentally restructuring your life.
Depending on your career and nationality, it might be worth thinking about moving home or to a different country. Perhaps you will have more family support as you move through the grief process or will be able to make a fresh start for you and your son.
Best of luck navigating through this difficult transition.
The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to firstname.lastname@example.org