Priority banking for home finance

Priority banking for home financeImage Credit: Supplied

If you have bought a luxurious new home and availed home finance with a bank or financial institution, it could be a start of a new journey with a host of added benefits, which can tide you over in business, help you make smart investments and add to your lifestyle. Economic steadiness in the UAE has resulted in a mature real estate market, with private wealth growth following suite. Global consultancy firm Strategy& says there are about 330,000 households in the UAE who hold anywhere between $200,000 (Dh734,590) and $1 million in investible assets.

Privilege class

Banks are at the forefront of helping the housing market mature by introducing incentives, especially for clients who take on a relatively large financing deal. One of the lesser-known advantages offered is the automatic upgrade of such clients to the ''priority'' category.

Typically, a customer is on-boarded as a priority or a wealth client based on the finance value and income. A finance value of Dh2 million to Dh5 million or a minimum monthly income of Dh50,000 should be sufficient for an entry into the priority banking space. Financial institutions have different levels within the priority/wealth segment, and higher finance amounts can further upgrade the client into a more exclusive account status, with corresponding benefits allotted accordingly.

A differentiated criteria could apply for automatic upgrades, which could be based on a client’s asset relationship with the bank. This can depend on income, length of relationship, deposits, revenue contribution via investment and wealth management products. The process for securing priority account status is simple for new as well as existing customers, and does not require additional documentation. An automatic upgrade is followed by a letter from the bank, listing the respective privileges.

High priority

Clients who avail home finance of a certain value as defined, stand to gain substantially when they get a priority account status. On average, home finance clients who are converted to priority via their finance status would be around 30-40 per cent of the monthly home finance acquisition of a financial institution.

It is for this reason that banks pay close attention to this segment, and put together attractive offerings for such clients. Affluent clients need more than just a basic bank account; they seek multiple banking services, such as financing, leveraging facilities as well as wealth creation products.

One of the startup advantages a priority client gets is priority status while processing transactions across all touch points in the bank. Reserved car parking spaces and extension of business hours at key priority centres are some of the other benefits that banks in the region offer their priority customers.

For such affluent clients, banks offer dedicated priority relationship managers as one point of contact for all services related to their needs and banking requirements. They ensure that all needs of clients, from financing facilities to international remittances, are met. The priority relationship managers are also trained financial advisors, supported by a team of investment specialists, who can engage with clients, helping them secure investment solutions.

The most sought-after benefit is preferential treatment in terms of pricing and discounts that reduce cost of day-to-day banking for priority clients. These include, preferential rates on deposits and investments, higher limits and discounted rates on retail finance products, fee waivers and discounts on a range of transactions, including international fund transfers, preferential foreign exchange rates, etc.

Banks also extend a wide variety of exclusive lifestyle privileges for their customers. For instance, Noor Bank offers free valet services at the airport and prominent malls in Dubai and Abu Dhabi. Most of the financial institutions top up priority features for their debit and credit card holders that bring a host of benefits across the travel, leisure, entertainment, retail, fine dining and hospitality sectors.

Client checklist

As most of the banks in the region offer tailor-made priority facilities, which are linked to their home finance proposition, a salaried client should look out for annual fee waived credit cards with lifestyle rewards, or preferential pricing on retail banking products, such as auto and personal finance. Entrepreneurs can look out for preferential pricing on company finance and their working capital needs.

One must, however, remember that priority packages are predefined and benefits vary based on the account status within the umbrella of priority account benefits.

Exercise caution

Clients also need to take a call on whether they wish to allow a single bank to handle their entire financial portfolio. While this obviously has the advantage of dedicated managers handling their concerns holistically, such a close-knit, inter-product relationship can also get rocky.

In the end, potential investors should keep priority upgrades in mind and seek financing from a financial institution or bank that offer products that work to their advantage.

Get tips on understanding Islamic home finance

Source: Pawan Dhawan, Special to Property WeeklyPW

The author is Head of Home Finance at Noor Bank


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