It's boom time for UAE mortgage seekers

UAE banks are once again competing on mortgage prices and sugarcoating their offerings with freebies and extras to lure customers back to the country’s residential market.

Historically, finding a mortgage in the UAE with an interest rate under eight per cent was thought good – but we are now witnessing interest rates less than half of that.

Most recently, United Arab Bank (UAB) raised the bar, so to speak, while announcing the lowest benchmark rate of 3.99 per cent. “We are offering home loans at 3.99 per cent for the first year and 5.59 per cent for five years,” an executive at the bank told 'Emirates24|7'. “This offering is across all emirates except Ajman and Umm Al Quwain,” he added.

Standard Chartered Bank is offering an inaugural rate of 4.99 per cent. “The rate of interest (4.99 per cent) is fixed for one year and it will keep changing every year based on (3.9+SCBLR). SCBLR is the variable portion of mortgage loan interest rate.

Currently, SCBLR is 1.35 per cent so [somebody] who took a loan last year [will have to pay] (3.9+1.35 = 5.25 per cent) this year. No bank in the UAE is offering fixed rate for tenor of 20 years of more or less. Mortgage loans are based on the yearly interest rates,” said a loan officer in the bank.

Going by this rate, if you take a loan of Dh1.5 million, the monthly installment for first year will be Dh15,903 and the total repayment will approximately  amount to  Dh1,908,360, if the loan tenure if for 10 years. The monthly outgo will come down to Dh11,854 for the first year if the tenure goes up to 15 years with a total repayment of  Dh2,133,720 and for 20 years the monthly installment for the first year will be Dh9,891 with an approximately repayment of Dh2,373,840.

Mashreq's promotional offer includes a 4.99 per cent interest rate, zero processing fee options, and complimentary life and property insurance for the first year, besides sops such as free property valuation and an iPad 2.

Barclays is also going competitive. “Our mortgage rates are as low as 5.35 per cent fixed for two years. We offer an option to the customer to lock their interest rates up to a period of seven years at a rate of 7.75 per cent. In addition to this we have no application fee and zero processing fee on the mortgage application,” said a spokesperson of the bank.

Emirates NBD is also offering a promotional rate of 4.99 per cent. The bank charges a processing fee is 1 per cent of the loan amount, minimum Dh5,000 (non-refundable) payable upfront. Property insurance (charged at 0.05 per cent p.a. of the property value) and borrower's life Insurance (charged at 0.4 per cent p.a of the outstanding loan amount) is mandatory and will be assigned to the bank from approved insurers.

Rakbank is also offering good rates on properties in Abu Dhabi and Dubai. The interest rates start at 5.50 per cent with finance available on select projects with title deeds. Below is Rakbank’s mortgage rates EMI table @ 7.00 per cent reducing basis. This amount does not include life and property insurance premium.

HSBC is offering home loans @ 5.49 per cent for homeowners with a starting salary of Dh15,000 with no salary transfer required. The bank is also offering free home contents insurance cover for one year, no early settlement charges, except for 3 per cent on buy-outs and a free HSBC Premier or HSBC Advance Current Account.

Tamweel’s home finance plus is available at a profit rate starting from 5.25 per cent p.a. It also offers zero fee on early and partial settlement, 24-hours pre-approval service, free relocation services, free residential maintenance for two years, free property evaluation, free life takaful for two years, furniture discounts and profit-free property registration finance. 

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