UAE banks implement new mortgage rules

The new UAE Central Bank mortgage regulations came into effect from December 28, according to local bankers.

“We have been told to start implementing the new mortgage caps from December 28,” a senior official with a top local bank told Emirates 24|7 on conditions of anonymity.

Pre-approval letters issued to customers will not be valid after December 28, he added.

Another banker with a local Islamic bank confirmed that they would only process applications received for final mortgage approval till Thursday (today), however, the time of validity for these approvals is likely to be reduced.

Generally, the final mortgage approval letter stands valid for 45 to 60 days (It differs from bank to bank). Customers have to complete/register the transaction with the Dubai Land Department within the specified time.

The banker confirmed that pre-approvals given before stand cancelled from December 28.

The UAE Central Bank issued new mortgage lending regulation in October, which allows banks to provide loans of up to 80 per cent of the property value to Emiratis and 75 per cent to expatriates.

If UAE nationals seek loans for a second house/ investment property, the loan eligibility shall not exceed 65 per cent of the value of the property, while expatriates buying second house will be eligible only for a mortgage of up to a maximum of 60 per cent of the property’s value. The maximum LTV for mortgage on property being purchased off-plan is set at 50 per cent, regardless of the purpose, value or category of the purchaser.

This website had reported last week that a local Islamic bank is offering up to 90 per cent home loan to property buyers in the UAE, with the option of even getting finance for registration fee.

Since early this year, banks have been providing up to 85 per cent home finance.

In order to ensure that all banks follow the new rules, Abdulaziz Al Ghurair, Chairman of UAE Banks Federation, the representative body of banks operating in the country, had called for penalties for banks and bank employees found flouting the rules.

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