The Central Bank decided to reinstate the early repayment or partial settlement of private housing loans to a maximum of 1% of the outstanding balance or AED 10,000 whichever is lower, stressing the obligation of banks and finance companies that acted (arbitrarily) to respect the original conditions of their agreements and return the additional fees imposed on Customers within 30 days.
In detail, the Central Bank demanded all banks and finance companies operating in the country in Circular No. (3986/2019) signed by the Deputy Governor, Saif Al Shamsi, and obtained a copy of «Emirates Today», to redraw early settlement or partial settlement of private housing loans to 1% of Maximum outstanding balance or AED 10,000 whichever is lower.
Banks and finance companies that have arbitrarily changed the conditions of fees stipulated in existing agreements with customers must respect the original terms of their agreements and return the additional fees imposed on their customers to them within 30 days from the date of the specified notice. (Corresponding to 8 October 2019).
It is noteworthy that the Central Bank issued notice No. 157/2018 on June 19, 2018 including an amendment to the supplement of bank fees for personal loans and residential real estate financing, including changing the percentage of early or partial repayment of the housing loan to a maximum of 3% of the balance Remaining on the customer, instead of 1% or AED 10,000, whichever is less previously established. The central bank directed banks to publish the list of new fees on their websites.
Currently, banks add 5% VAT to their explicit fees, including early repayment fees.
Over the past 15 months, citizens faced difficulties in transferring their housing loans from one bank to another due to the high rate of early repayment, in addition to banks amending the old agreements to become a 3% fee and not only applying them to the new financing, which was met by the Central Bank decisively, He described these behaviors in his generalization as “arbitrary”. It is noteworthy that housing loans start from 200 thousand dirhams, up to five million dirhams, depending on the ability of the customer, and the average prevailing loan revolves between one million and two million dirhams, which makes the repayment rate according to the old fee on average from 30 thousand to 60 thousand dirhams.
- Obliging banks
And finance companies
That behaved in a manner
"Arbitrary" with respect
To their agreements and re
- «Central» directed
Publish a list of fees