The Central Bank formally introduced amendments to the mortgage loan system, issued in 2013, in effect from that date until a month ago, as the rate of financing was increased by an additional 5% to the rates previously used, with the aim of increasing the ability to bear the costs of purchasing homes.
The Central Bank said in Circular No. (1799/2020), which bears the signature of the new bank’s governor, Abdul Hamid Saeed, and Emirates Today obtained a copy of it, and it was sent, yesterday, to all banks and finance companies. We kindly ask you to inform you that according to the decision of the Board of Directors of the Central Bank, Circular No. (31/2013) regarding the mortgage loan system has been modified.
Through these amendments, the loan to value ratio for real estate buyers was increased for the first time, by increasing it by 5%, with the aim of increasing the ability to bear the costs of purchasing homes. According to the new amendments for the citizen, as follows: The first house
(Owner-Owner) Each borrower is entitled to one property under this category:
- If the value of the property is five million dirhams or less, the financing will be a maximum of 85% of the property's value.
- If the value of the property is more than five million dirhams, the financing will be a maximum of 75% of the value of the property.
The circular stated that the funds for non-"resident" citizens for the first house (owner-occupant) are as follows:
- If the value of the property is five million dirhams or less, the financing will be a maximum of 80% of the property's value.
- If the property value is more than five million dirhams, the maximum financing limit becomes 70% of the property value.
The Central Bank asked the banks to circulate these amendments to the banks ’administrations internally, to become effective immediately.
5%
Additional to previously established percentages.