Home loan in UAE

 

Home loan

Home loans or mortgages perhaps have the most detailed process, with several approvals and insurances required to get a loan approval.

For residents looking to buy a property in the UAE, banks offer loans that cover 75-80 per cent of the property value at the most. The rest has to be paid as down payment by the customer.

Documents needed

• Emirates ID, passport and visa copy
• Proof of income for salaried individuals.
• Photocopy of trade/commercial license for self-employed inviduals.
• Copy of allotment letter (the developer issues the allotment letter, which includes details of the property)
• 3-6 months bank statements
• Buyer Agreement
• Proof of funds

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If you are lucky enough to have a working spouse, then it is advisable to transfer all savings into one bank account.

You can provide details of this bank account on your loan application as evidence that you have enough savings and have prudent saving behaviour.

Apart from the regular documents, you will also need the following:

• Pre-approval from the bank
• Life insurance
• Property insurance

Pre-approvals from banks would help you determine your eligibility for a Home Loan before you decided to finalise a property. When you are shopping around for the right mortgage, you can request for a pre-approval from banks, which would cost you around Dh2,000. However, this will help you make a more informed decision on the mortgage that is offering you the best rates. Also, applying for pre-approvals does not affect your credit rating.

Life insurance and property insurance are mandatory for property purchases in the UAE and if you do not wish to take these policies from the same bank, you can always contact insurance providers for the best offers.

Processing

The loan process will take at least seven working days subject to submission of all required documents.

Business loan

Whether you are looking to expand your business or start a new one, business loans are provided to small and medium-sized companies to meet their business requirements with minimal and hassle-free documentation. Within business loans there are several options that you need to look at. Whether you are looking for cash to increase your liquidity or need to finance the purchase of certain equipment, banks have various options available for businesses.

Documents needed:

• Filled in the application form.
• Partnership agreement/Power of Attorney (POA)/ Article of -Association/Memorandum of Association (MOA).
• Trade license (copy).
• Bank statements.
• Passport (copy).
• Other valid documents (varies bank to bank).

Additional charges

Apart from the loan amount and interest, there are several processing fees that you need to keep in mind when budgeting repayments.

Processing fees – This is a one-time fee that is levied by the bank and is often non-refundable, even if the loan does not get sanctioned. The fees can vary based on the bank you deal with.

Insurance fees – Most banks also have loan protection insurance or additional insurance requirements like life or property insurance, depending on the type of loan you might be applying for.

Installment deferral fees – If you are unable to make a payment on time, you would need to request for an installment deferral, which comes at a cost. Most banks offer two installment deferments per year.

Early settlement fees - If you are in a position to settle your loan before the stipulated time, you can do so but would need to pay an additional fee., However, these may actually be minimal (1 per cent of the repaid amount or Dh10,000 whichever is less) compared to the interest you save on repaying the loan sooner.

Apart from these tips, it is always recommended that you take the time to read the terms and conditions carefully, to ensure you do not sign yourself up for a contract that you cannot fulfil. Also, even if you are in urgent need of a loan, make sure you look for the best option and the lowest interest rate on offer. Apart from these steps, always keep a buffer amount in place for a rainy day. Experts advise individuals to have enough money for at least six months of installments as savings in the bank.