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I have a mortgage with a local lender but the rate is uncompetitive. What will be the charge for moving my mortgage to another bank?
The rules regarding the charges banks can levy for any service are set out by the Central Bank of the UAE and all banks and lenders are obliged to comply.
With effect from the start of 2014, a Central Bank ruling was released that limited the redemption penalties for all mortgages and this applies retrospectively. The maximum charge is 1% of the balance or Dh 10,000, whichever is lower. Any paperwork showing a higher charge, even if agreed by the borrower, will not stand, so if any lender tries to charge a higher fee, the borrower can make a formal complaint at the Central Bank, which will back them up. Although the fee can still be a substantial amount, it is much less than charged previously and makes it cost-effective for many borrowers to rearrange their mortgages.
Are there any ready properties in the market for finance buyers who don’t have the 25% deposit required?
For finance buyers who don’t have the full 25% deposit but are eligible for finance from the bank, there are options in the market for them.
There are attractive payment schemes with much lower down payments for homes at Bloomingdale in Dubai Sports City and Lilac Park in Jumeirah Village Circle. Finance buyers pay only 7% instead of the usual 25% payment to move in, in conjunction with the 75% loan they receive from the bank. The remaining 18% is paid at an interest-free rate of 0.5% per month for 36 months. So, finance buyers who have the capacity to get the necessary loan to buy but don’t have the whole deposit, or buyers who don’t want to sink all their capital into the property immediately will find the payment terms very beneficial. There is also the option for cash buyers to pay only 20% down payment to move in and 2% for 40 months.
When I first considered buying a few years ago, I had a deposit of 15%. Do you know any banks that are still lending this amount?
The regulation for lending changed at the start of last year following a ruling by the Central Bank.
Expats can now only borrow up to 75% if the purchase price is Dh5 million or less. If the purchase price is in excess of Dh5 million, the borrowing is restricted to 60%.
For someone buying a second property in the UAE, the loan to value will be restricted to 60% regardless of the property value.
For Emiratis, the maximum loan to value for a first property is 80% for a value of up to Dh5 million and then 75% for larger valuations.
For second and subsequent purchases, they will be limited to 65%.
Furthermore, the maximum borrowing for any properties bought off-plan will be 50% of the value for all borrowers.
I am on an employment visa for a firm in which I am a partner. Can a UAE residency visa be changed to a property related visa?
While property linked residency visas are available to owners and valid for six months, if that person is working in Dubai whether as an employee, partner or company owner, he must retain his work-related visa and is not permitted to swap it for one linked to a property. Similarly, if someone is on a residency visa linked to property ownership and gets a job in the UAE, or sets up a company, he must change his status. It is generally far more beneficial to be on a work-related visa as this is valid for at least two years and must be paid for by the sponsor. On the other hand, a property related visa is valid for just six months and must be renewed with a fee payable each time. To be entitled to a residence visa, the investor must own a property with a minimum value of Dh1 million and show a regular income equivalent to Dh10,000 per month. This must be verifiable but can come from within the UAE or abroad.
Question of the Week: If a landlord follows the RERA rules in raising rent, can a tenant reject it? Also, if a landlord cannot be contacted, how do you pay the rent?
A landlord may increase the rent payable in line with the limit shown on the RERA calculator.
He must give the tenant notice of this at least 90 days prior to renewal in respect of any increase.
He should also advise the tenant that the increase will be in accordance with the calculator.
The annual contract needs only to be issued at the time of renewal and not months beforehand.
If this is followed, then the increase can be applied, and if the tenant did not give a 60-day notice of leaving, the tenancy will renew at the increased rate.
The law states that if the rent is not paid within 30 days of the due date, the tenant can be evicted for non-payment even if he has tried to contact the landlord.
The solution is to contact RERA and explain the situation. You will then need to take the rent cheque to them with full details and a copy of last year’s tenancy agreement.
They will hold the cheque until the landlord responds. This will be deemed to be the payment for the rent, and the tenant will not be considered to be in default.