In the market for a mortgage in the UAE? Taking a home loan is one of the most important financial decisions you will make. How you look for a mortgage and understanding ways to save money can mean the difference between being stuck with a financial burden for the next 25 years or having flexibility in your financial life. Loans and mortgages can be very complicated, and the fine print can be overwhelming; we explore ways to find a mortgage, and points to keep in mind during your discussions with banks.
Don’t Check With Your Current Bank Only
bayzat makes it fast and easy to compare mortgages in the UAE. Borrowing to purchase a home is a long-term commitment, so it would be a huge mistake not to take a few minutes to check bayzat to find the lowest interest rates and best home loans.
Ask a Friend or Colleague
Speaking to someone who has recently taken a mortgage in the UAE about their experience is a great way to learn if that bank is right for you. However, it is important to note that most people rarely ever have the same requirements or profile as you. Differences in income, real estate prices and location can greatly affect the loan terms that are offered to an individual.
Get Professional Advice
Getting in touch with a third party mortgage expert can be the most convenient way to find the right mortgage. Of course, you will have to pay for this advice, but having the right person to walk you through the process and negotiate with the banks on your behalf can make your life a whole lot easier. Through bayzat, you can get in touch with a mortgage expert and get a free consultation.
Don’t Get Carried Away With Flat and Reducing Interest Rates
Banks will state their interest rate according to different conventions. While it is useful to understand the difference (and bayzat provides an easy interface to compare the relevant rates), what you really need to worry about at the end of the day is the monthly payment you have to make. Ultimately, you will make a fixed monthly payment whether the loan is based on a flat or reducing rate.
If you want to learn more, you can read our article: Don't be Deceived by Flat and Reducing Rates.
Low Early Repayment Fees for the Future
You can typically pay back a mortgage before it matures, or pay more than the agreed monthly amount. This is a great way to reduce the total interest you pay during the life of the loan and save money - depending on the early settlement fee! This can be as little as 0.5% or up to 5%. Try to negotiate with the bank to reduce this fee; it will give you the flexibility to pay off the loan sooner in the future. Note that the early settlement fee can also differ depending on how you are repaying the loan, if you are taking out a second mortgage to repay the first one, the bank will usually charge you a higher fee.
Virtually all UAE banks will levy an arrangement fee when you take a mortgage. You can usually pay it in cash, or add it to the loan amount; a higher rate will usually be charged for the latter. This fee is typically over 1% of the amount borrowed. Again, try to negotiate with your bank to reduce the arrangement fee as much as possible.