21 days only for 85% home loans

Mortgage pre-approval letters issued by banks in the UAE with home finance value of 85 per cent will not be valid from December 1 onwards, a banker told Emirates 24|7.

“We have told our clients that the pre-approved mortgage letter issued this month will not be valid after December 1,” a senior mortgage consultant with a top local bank said on conditions of anonymity.

“We have urged our clients to complete their transactions before the month-end.

“Thereafter, we will be following the UAE Central Bank new guidelines on mortgages,” he added.

The validity of mortgage pre-approval letters varies from bank to bank, but generally they are valid for 45 to 60 days from the date of issuance.

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

The new rules will be enforced one month after they are published in the official gazette.

Moreover, home buyers will no longer be allowed to seek personal loans or use their credit cards to meet their downpayment requirements, the Central Bank said.

Home loan applications in the UAE are set to soar in the next one month, Sam Wani, General Manager, Independent Finance, had told this website.

(Read: New UAE mortgage law: Want a home loan today?)

UAE Central Bank Governor Sultan Nasser Al Suwaidi has said that the new limits on mortgage loans would help the banking sector.

“That will be beneficial to the market because it will define for all banks what is possible, what is not possible,” he told reporters on the sidelines of the World Islamic Economic Forum in London.

Maximum LTV ratio

Citizens of the UAE

First home: If the property value is Dh5 million or less - a maximum 80% of the property value

If the value of the property more than Dh5 million - a maximum 70% of the property value

Second and subsequent homes or investment property: 65% of the value of the property, regardless of value

Non-Emiratis

First home: If the value of the property is less than Dh5 million - a maximum 75% of the property value

If the value of the property is more than Dh5 million - a maximum 65% of the value of the property

Second and subsequent homes or investment property

60% of the value of the property, regardless of value

Maximum period of the loan

Maximum length of mortgage loan of 25 years

Maximum age of the borrower at the time of payment of the last installment 70 years for citizens and 65 years for non-citizens (or 70 years if the borrower works for the benefit of himself)
 

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