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.
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.
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.
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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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
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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
Killing of Qassem Suleimani
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
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.
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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
Killing of Qassem Suleimani
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.
Mohammed bin Zayed Majlis
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
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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
KILLING OF QASSEM SULEIMANI
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