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14 April 2024

Choose the best mortgage for you

By Helen Ward

One of the most important, and possibly the most confusing, decisions to be made in the home-buying process is what mortgage to choose. Your choice is vitally important as the wrong decision can be financially devastating. What appears to be the cheapest option on day one may not always prove to be so over the life of your loan. But with so many lenders in the marketplace, each with different products, how do you choose the right one for you?

      - Speak to a mortgage broker. There are currently 23 lenders in the UAE offering home loans; working through a broker is the most convenient and practical way of comparing all available deals. Let an independent broker review your personal circumstances and recommend the most appropriate solution for you.

­          - Get a pre-approved mortgage offer before you put down a deposit. Most banks will consider your circumstances and agree how much they will lend you before you buy a property. This enables you to shop around with a clear budget in mind and know that when you have found your dream home the process for finalising the loan will be swifter.

­          - Research which banks finance the development you want to buy. You might be a fantastic credit prospect but if your preferred lender does not provide mortgage finance for the home you are buying then you will have to look elsewhere.

­          - Understand your priorities when choosing a lender. If finding the lowest interest or profit rate to give you the lowest monthly repayment cost is your most important priority then it will dictate which banks to approach. Alternatively work out if getting the loan quickly is more important, because if several of you are competing for your dream home then a different set of banks will be in the frame. Consider all financing options both Islamic and conventional. Also look at property you may own overseas as raising mortgage finance against it might be a better option than doing so in Dubai.

­          - Understand all the costs associated with buying property, not just the interest/profit rate. Lender’s fees, real estate agent’s fees, developer’s fees, and land department charges can add up to five per cent to the property purchase price.

­          - Don’t over-stretch yourself. Understand what you can afford and stick to it. Being over committed financially can take the enjoyment out of property ownership. A good mortgage broker with a detailed understanding of lenders’ current credit policies will be able to recommend the best lender/product solution.

­          - Expect the unexpected and don’t give up. Getting a mortgage can be a very daunting prospect. However, the ultimate goal of home ownership and getting out of the rental trap is worth the patience you will have to employ.

 Helen Ward is Sales and Marketing Director of Haven Mortgages.