ALL YOU WANT TO KNOW ABOUT MORTGAGE
All you want to know about Mortgage
With today’s technology and avid options in the market, it is difficult to process that the whole procedure of purchasing a home is tedious and full of technicality. Especially in Dubai/UAE if you plan to purchase a home, it needs lots of brain storming and financial management. One of such technicality is Money. You need to arrange the cost of the property. Mortgage is one of the easiest and efficient way to pay off for the purchase. Hence, we have come up with a brief outline about mortgage for your ready reference.
What is mortgage?
In simple terms a mortgage can be define as a loan/ payment via bank or other financial institutions that a person can use to finance the purchase of home. Law No (13) of 2008, is a Mortgage law which regulates the interim real estate register in the emirate of Dubai.
The basic of the mortgage law
Article 7 describes registration
of a Mortgage:
A Mortgage is not valid unless it is registered with the appropriate authority. Further, the Owner of the property (Mortgagor), shall bear the costs of the contract unless otherwise agreed.
Terms of a Mortgage:
Articles 10 to 20 of Law No (13) of 2008 lay out the rights and restrictions of both the mortgagor and the mortgagee during the period of the mortgage. Execution Proceedings on the Mortgaged Property: the law clearly outlines the terms on how a mortgagee may commence legal proceedings against a mortgagor in case of any default in payment.
Mortgage Application Procedure
for RERA:
Real Estate Regulatory Authority (RERA) outlines all the documents that must be accompanied along with a mortgage application so that it can be registered.
Loan to Value ratio:
The loan to value (LTV) is a lending risk assessment ratio that banks and lenders use to consider your finances before approving a mortgage. It is determined by observing the size of mortgage in relation to the value of the property you want to purchase. These LTV are set by mortgage regulation in UAE.
Types of Mortgages
It will help in forming opinion if we know all the types of mortgages and where we fit in.
Fixed rate Mortgage:
In case of fixed rate mortgage the borrower gets a clear budget as they are well aware that the rate of interest shall remain fixed for the term of loan. It will not get effected by the change in market rate. The mortgager knows in advance the amount they will pay in advance.
Discounted rate mortgage:
Under this mortgage financial help is provided on the basis of standard rate of interest. The discount is provided for a particular period of time. It may sound a cheap option for the borrower but can be a trouble in long run as the discount is for a particular period.
Re-mortgage:
Re-mortgage is getting a loan on existing mortgage or transfer of the existing mortgage. It comes into picture in case the borrower needs additional fund or the borrower gets new loan at a low interest.
Variable rate mortgage:
under this mortgage the interest rate depends on market factors and are subject to change during the term of loan. The borrower shall have a financial stability to handle change in mortgage rates.
Capped mortgage:
it is an introductory offer by financial institutions. It is very much similar to variable rate mortgage. The only difference is here the maximum cap is fixed at the beginning of term. In case of change in market rate the instalment shall not exceed the predefined cap.
Offset mortgage:
it is an upcoming concept in UAE. In this borrower can link any account running in any of the bank in UAE. Whenever any amount is credited in any of the account the loan amount gets deducted from the same. Purchasing a dream home is a pleasant experience, especially when it is well planned and all the financial impacts are well taken care off. Hope this article will help you in making a definitive opinion and bring you a step closure to your dream home.