Illustration by The National
Illustration by The National
Illustration by The National
Illustration by The National

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


Nada El Sawy
  • English
  • Arabic

When Fahmi received the handover notice for his villa on Abu Dhabi's Yas Island in mid-March, he faced a difficult decision: sell the property or apply for a mortgage to cover the outstanding balance. 
Declining to give his full name, Fahmi looked into the rate over five years for a Dh2.5 million mortgage and found it to be expensive, costing "close to Dh180,000 in interest". 
Shortly thereafter, he came across a limited-time offer from the property developer Aldar through three lenders: a 1.99 per cent rate over five years with no application or valuation fees. 
"Now with this offer, I'm only paying Dh113,000 over five years. You're talking close to 40 per cent reduction," says Fahmi. "It's as cheap as getting a car loan."

While he was leaning towards selling to free up capital amid the Covid-19 uncertainty, the “phenomenal” rate changed his mind.

I've been doing home finance in Dubai for 15 years now and it's the lowest I've ever seen interest rates in the UAE

"When I looked at the mortgage rate and the monthly payments and the fact I've been here for 20 years paying rent, I thought 'this is an opportune time for me to move to a house'," he says.
As the coronavirus continues to spread worldwide and the global economy slips further into recession with millions of people losing their jobs, it may not seem like the opportune time to add the hefty financial commitment of paying for a mortgage.

However, favourable rates, fee waivers, a reduced loan-to-value ratio, bank payment holidays and the removal of the early settlement fee are all reasons to apply for a new home loan or renegotiate an existing one in the UAE.While there are factors to take into account, such as the decline of real estate prices in recent years and job security, mortgage brokers say property buyers should take advantage of exceptionally low borrowing costs. 
"I've been doing home finance in Dubai for 15 years now and it's the lowest I've ever seen interest rates in the UAE," says Richard Boyd, director at Mortgage Finder, part of the Property Finder Group.

Richard Boyd, director at Mortgage Finder, says the site has seen a 15 per cent increase in mortgage applications in the first quarter of this year, compared to 2019. Courtesy: Mortgage Finder
Richard Boyd, director at Mortgage Finder, says the site has seen a 15 per cent increase in mortgage applications in the first quarter of this year, compared to 2019. Courtesy: Mortgage Finder

With the US Federal Reserve slashing its benchmark interest rates to near zero in emergency moves in March, the UAE has seen interest rates come down significantly in that period, given that the dirham is pegged to the dollar. 
The Central Bank of the UAE lowered its benchmark interest rate by 50 basis points to 1.5 per cent in early March and then cut its rate on one-week certificates of deposit by 75 basis points a couple of weeks later.

Banks, as a result, have become more competitive with their mortgage offers. "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,” says Stuart Roe, head of mortgages at Allsopp & Allsopp real estate agency.

As part of the central bank's Dh256 billion stimulus package, borrowers can also benefit from loan relief from their banks for up to six months, while first-time home buyers are eligible for a 5 per cent increase in the loan-to-value ratio (up to 80 per cent for expatriates and 85 per cent for UAE nationals) and a full waiver of processing fees.

Stuart Roe, head of mortgages at Allsopp & Allsopp, says bank rates have at their most competitive. Courtesy: Allsopp & Allsopp
Stuart Roe, head of mortgages at Allsopp & Allsopp, says bank rates have at their most competitive. Courtesy: Allsopp & Allsopp

Home buyers can now get a mortgage for the lowest fixed rate of 2.7 per cent for one year, say brokers. Fixed rates for three to five years range from 2.99 per cent to 3.5 per cent. That is about 25 per cent cheaper than 12 months ago, when an average three-year fixed rate mortgage was 3.99 per cent, says Mr Boyd. 
Arran Summerhill, director of UAE mortgage broker Holo, says banks are also offering "headline rates" to further attract customers. These are often limited in time or to specific properties. 
For example, the Aldar offer is only available for 30 days from April 20 and applies to customers who have already purchased or are looking to purchase homes in Yas Acres, The Bridges on Al Reem Island, and Mamsha and Jawaher on Al Saadiyat Island. 
Homeowners in those communities were able to apply for financing through Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank and First Abu Dhabi Bank. Although subject to terms and conditions and approval, the offer included a rate from 1.99 per cent, fixed for three or five years, and up to six months' deferral on first instalments. 
Lower real estate prices have also been an important factor encouraging people in the UAE to get on the property ladder. Prices have gone down between 20 to 40 per cent over the last couple of years, says Mr Summerhill. 
"The stimulus package and the decrease in the rates and the lower prices has offset some of the uncertainty in the market," he says.
Over the last two months, mortgage applications through the Holo site have grown threefold. About 60 per cent are applications to refinance. Another trend is that about 80 per cent of applicants are end users, rather than investors, Mr Summerhill adds.

Arran Summerhill, director of UAE mortgage broker Holo, says applications have grown threefold in two months. Pawan Singh / The National
Arran Summerhill, director of UAE mortgage broker Holo, says applications have grown threefold in two months. Pawan Singh / The National

Mortgage Finder has seen a 15 per cent increase in mortgage applications in the first quarter of this year, compared to the same period in 2019. While there was a slight reduction during the coronavirus lockdown period, the numbers have gone up since movement restrictions were eased, Mr Boyd says. 
Refinancing accounts for much of the increase in mortgage applications, according to brokers.
"Some clients are stuck still paying anywhere from 5 to 6 per cent, so potentially there's good savings to switch," Mr Boyd says.

In October, the central bank removed the 3 per cent early settlement fee for mortgages introduced in 2018 and reverted to a 1 per cent or Dh10,000 cap, whichever is lower. 
Combined with low interest rates and increased lending, "it's suddenly become a lot more relevant to look at refinancing the loans that they've had", says Mr Summerhill. 
There are some factors to consider, however, including the decline in property values, the percentage borrowed, the outstanding amount and the fees associated with moving to another lender. 
"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 per cent of the value," says Mr Roe. 
It is still worth investigating, says Mr Summerhill. A valuation costs Dh2,500 to Dh3,500, but homeowners can get a free estimate of the value of their home at homevalue.ai.

However, it is at the discretion of banks how much to lend up to the maximum ratio, whether for a new mortgage or refinancing. As businesses and others affected by Covid-19 look to release equity from properties, some banks have reacted by limiting the amount, says Mr Summerhill. 
"Some banks were only going up to 20 per cent as a maximum and they wanted to see if that was being used for property renovations," he says. Other banks put a 50 per cent cap on "cash out", while still others have been happy to lend at the normal limits of up to 80 per cent for a first property or up to 60 per cent for a second.
In these uncertain times, job security is another key consideration. "If you've lost your job and you've actually signed to buy a property, then that can be tricky because the bank may recall the finance offer," says Mr Boyd.

The good news is that banks are being more flexible, with some lenders willing to offer “interest-only for up to a year to help”, he says. Even clients whose salaries have been cut have had mortgage applications approved, but it depends on the bank. Home buyers in hard-hit industries such as aviation and oil & gas may also get rejected.

For Fahmi, a senior manager with a UAE company, it helped that he had a "good standing" with his bank ADCB to apply for the mortgage. With "an attractive payment scheme" from Aldar, he was able to put 10 per cent as an initial down payment on the four-bedroom villa in 2016 and pay 20 per cent before handover. He chose to pay another Dh1m in cash, paying 50 per cent of the value of the Dh5m property before taking a mortgage. 
Although he was wary of the current situation, he says he felt it was the right time to move to his own home with his wife and four children. 
"It is dire and difficult for many people," he adds, "but I found it too good of an offer to let go."

UAE currency: the story behind the money in your pockets
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%3Cp%3E%3Cstrong%3EDirector%3A%C2%A0%3C%2Fstrong%3EHayao%20Miyazaki%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%C2%A0Soma%20Santoki%2C%20Masaki%20Suda%2C%20Ko%20Shibasaki%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E5%2F5%3C%2Fp%3E%0A
The specs: Fenyr SuperSport

Price, base: Dh5.1 million

Engine: 3.8-litre twin-turbo flat-six

Transmission: Seven-speed automatic

Power: 800hp @ 7,100pm

Torque: 980Nm @ 4,000rpm

Fuel economy, combined: 13.5L / 100km

Roll%20of%20Honour%2C%20men%E2%80%99s%20domestic%20rugby%20season
%3Cp%3E%3Cstrong%3EWest%20Asia%20Premiership%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Tigers%0D%3Cbr%3ERunners%20up%3A%20Bahrain%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EUAE%20Premiership%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Jebel%20Ali%20Dragons%0D%3Cbr%3ERunners%20up%3A%20Dubai%20Hurricanes%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EUAE%20Division%201%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Sharks%0D%3Cbr%3ERunners%20up%3A%20Abu%20Dhabi%20Harlequins%20II%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EUAE%20Division%202%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Tigers%20III%0D%3Cbr%3ERunners%20up%3A%20Dubai%20Sharks%20II%0D%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EDubai%20Sevens%3C%2Fstrong%3E%0D%3Cbr%3EChampions%3A%20Dubai%20Tigers%0D%3Cbr%3ERunners%20up%3A%20Dubai%20Hurricanes%3C%2Fp%3E%0A
The White Lotus: Season three

Creator: Mike White

Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell

Rating: 4.5/5

THE SPECS

Engine: 2.0-litre 4-cylinder turbo

Power: 275hp at 6,600rpm

Torque: 353Nm from 1,450-4,700rpm

Transmission: 8-speed dual-clutch auto

Top speed: 250kph

Fuel consumption: 6.8L/100km

On sale: Now

Price: Dh146,999

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home. 

RESULTS

5pm: Watha Stallions Cup Handicap (PA) Dh 70,000 (Dirt) 2,000m

Winner: Dalil De Carrere, Bernardo Pinheiro (jockey), Mohamed Daggash (trainer)

5.30pm: Maiden (TB) Dh 70,000 (D) 2,000m

Winner: Miracle Maker, Xavier Ziani, Salem bin Ghadayer

6pm: Maiden (PA) Dh 70,000 (D) 1,600m

Winner: Pharitz Al Denari, Bernardo Pinheiro, Mahmood Hussain

6.30pm: Maiden (PA) Dh 70,000 (D) 1,600m

Winner: Oss, Jesus Rosales, Abdallah Al Hammadi

7pm: Handicap (PA) Dh 70,000 (D) 1,400m

Winner: ES Nahawand, Fernando Jara, Mohamed Daggash

7.30pm: Maiden (PA) Dh 70,000 (D) 1,000m

Winner: AF Almajhaz, Abdul Aziz Al Balushi, Khalifa Al Neyadi

8pm: Maiden (PA) Dh 70,000 (D) 1,000m

Winner: AF Lewaa, Bernardo Pinheiro, Qaiss Aboud.

Sole survivors
  • Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
  • George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
  • Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
  • Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Infiniti QX80 specs

Engine: twin-turbocharged 3.5-liter V6

Power: 450hp

Torque: 700Nm

Price: From Dh450,000, Autograph model from Dh510,000

Available: Now

While you're here
At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

THE BIO

Born: Mukalla, Yemen, 1979

Education: UAE University, Al Ain

Family: Married with two daughters: Asayel, 7, and Sara, 6

Favourite piece of music: Horse Dance by Naseer Shamma

Favourite book: Science and geology

Favourite place to travel to: Washington DC

Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.

THE SPECS

      

 

Engine: 1.5-litre

 

Transmission: 6-speed automatic

 

Power: 110 horsepower 

 

Torque: 147Nm 

 

Price: From Dh59,700 

 

On sale: now  

 
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Our family matters legal consultant

Name: Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

Specs%20
%3Cp%3E%3Cstrong%3EPower%20train%3A%20%3C%2Fstrong%3E4.0-litre%20twin-turbo%20V8%20and%20synchronous%20electric%20motor%3Cbr%3E%3Cstrong%3EMax%20power%3A%20%3C%2Fstrong%3E800hp%3Cbr%3E%3Cstrong%3EMax%20torque%3A%20%3C%2Fstrong%3E950Nm%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3EEight-speed%20auto%3Cbr%3E%3Cstrong%3EBattery%3A%20%3C%2Fstrong%3E25.7kWh%20lithium-ion%3Cbr%3E0-100km%2Fh%3A%203.4sec%3Cbr%3E0-200km%2Fh%3A%2011.4sec%3Cbr%3E%3Cstrong%3ETop%20speed%3A%20%3C%2Fstrong%3E312km%2Fh%3Cbr%3E%3Cstrong%3EMax%20electric-only%20range%3A%3C%2Fstrong%3E%2060km%20(claimed)%3Cbr%3E%3Cstrong%3EOn%20sale%3A%3C%2Fstrong%3E%20Q3%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh1.2m%20(estimate)%3Cbr%3E%3Cbr%3E%3C%2Fp%3E%0A
WOMAN AND CHILD

Director: Saeed Roustaee

Starring: Parinaz Izadyar, Payman Maadi

Rating: 4/5

ESSENTIALS

The flights 
Emirates, Etihad and Swiss fly direct from the UAE to Zurich from Dh2,855 return, including taxes.
 

The chalet
Chalet N is currently open in winter only, between now and April 21. During the ski season, starting on December 11, a week’s rental costs from €210,000 (Dh898,431) per week for the whole property, which has 22 beds in total, across six suites, three double rooms and a children’s suite. The price includes all scheduled meals, a week’s ski pass, Wi-Fi, parking, transfers between Munich, Innsbruck or Zurich airports and one 50-minute massage per person. Private ski lessons cost from €360 (Dh1,541) per day. Halal food is available on request.

Third Test

Day 3, stumps

India 443-7 (d) & 54-5 (27 ov)
Australia 151

India lead by 346 runs with 5 wickets remaining

UAE currency: the story behind the money in your pockets

Leap of Faith

Michael J Mazarr

Public Affairs

Dh67
 

Getting there

The flights

Flydubai operates up to seven flights a week to Helsinki. Return fares to Helsinki from Dubai start from Dh1,545 in Economy and Dh7,560 in Business Class.

The stay

Golden Crown Igloos in Levi offer stays from Dh1,215 per person per night for a superior igloo; www.leviniglut.net 

Panorama Hotel in Levi is conveniently located at the top of Levi fell, a short walk from the gondola. Stays start from Dh292 per night based on two people sharing; www. golevi.fi/en/accommodation/hotel-levi-panorama

Arctic Treehouse Hotel in Rovaniemi offers stays from Dh1,379 per night based on two people sharing; www.arctictreehousehotel.com

Know your camel milk:
Flavour: Similar to goat’s milk, although less pungent. Vaguely sweet with a subtle, salty aftertaste.
Texture: Smooth and creamy, with a slightly thinner consistency than cow’s milk.
Use it: In your morning coffee, to add flavour to homemade ice cream and milk-heavy desserts, smoothies, spiced camel-milk hot chocolate.
Goes well with: chocolate and caramel, saffron, cardamom and cloves. Also works well with honey and dates.

Our family matters legal consultant

Name: Dr Hassan Mohsen Elhais

Position: legal consultant with Al Rowaad Advocates and Legal Consultants.

Electric scooters: some rules to remember
  • Riders must be 14-years-old or over
  • Wear a protective helmet
  • Park the electric scooter in designated parking lots (if any)
  • Do not leave electric scooter in locations that obstruct traffic or pedestrians
  • Solo riders only, no passengers allowed
  • Do not drive outside designated lanes
Racecard

5.25pm: Etihad Museum – Maiden (TB) Dh82,500 (Turf) 1,200m

6pm: Al Shindaga Museum – Handicap (TB) Dh87,500 (Dirt) 1,200m

6.35pm: Poet Al Oqaili – Handicap (TB) Dh95,000 (T) 1,400m

7.10pm: Majlis Ghurfat Al Sheif – Handicap (TB) Dh87,500 (D) 1,600m

7.45pm: Hatta – Handicap (TB) Dh95,000 (T) 1,400m

8.20pm: Al Fahidi – Rated Conditions (TB) Dh87,500 (D) 2,200m

8.55pm: Zabeel Trophy – Rated Conditions (TB) Dh120,000 (T) 1,600m

9.30pm: Coins Museum – Rated Conditions (TB) Dh95,000 (D) 1,600m

10.05pm: Al Quoz Creative – Handicap (TB) Dh95,000 (T) 1,000m

Teri%20Baaton%20Mein%20Aisa%20Uljha%20Jiya
%3Cp%3E%3Cstrong%3EDirectors%3A%3C%2Fstrong%3E%20Amit%20Joshi%20and%20Aradhana%20Sah%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ECast%3A%3C%2Fstrong%3E%20Shahid%20Kapoor%2C%20Kriti%20Sanon%2C%20Dharmendra%2C%20Dimple%20Kapadia%2C%20Rakesh%20Bedi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Result

2.15pm: Maiden Dh75,000 1,950m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).

2.45pm: Handicap Dh80,000 1,800m; Winner: Tailor’s Row, Royston Ffrench, Salem bin Ghadayer.

3.15pm: Handicap Dh85,000 1,600m; Winner: Native Appeal, Adam McLean, Doug Watson.

3.45pm: Handicap Dh115,000 1,950m; Winner: Conclusion, Antonio Fresu, Musabah Al Muhairi.

4.15pm: Handicap Dh100,000 1,400m; Winner: Pilgrim’s Treasure, Tadhg O’Shea, Satish Seemar.

4.45pm: Maiden Dh75,000 1,400m; Winner: Sanad Libya, Richard Mullen, Satish Seemar.

5.15pm: Handicap Dh90,000 1,000m; Winner: Midlander, Richard Mullen, Satish Seemar

ELIO

Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett

Directors: Madeline Sharafian, Domee Shi, Adrian Molina

Rating: 4/5

War

Director: Siddharth Anand

Cast: Hrithik Roshan, Tiger Shroff, Ashutosh Rana, Vaani Kapoor

Rating: Two out of five stars 

Most sought after workplace benefits in the UAE
  • Flexible work arrangements
  • Pension support
  • Mental well-being assistance
  • Insurance coverage for optical, dental, alternative medicine, cancer screening
  • Financial well-being incentives 
David Haye record

Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4