The central bank advised bank dealers wishing to take out real estate financing to buy a new home or investment property, to ask 20 fundamental questions regarding the term of payment, the interest rate, fees, delay penalties, and other matters.
The Central Bank explained in an awareness bulletin that Emirates Today obtained a copy of it. A mortgage is a type of loan that is usually used to finance the purchase of a property, such as a new home or an investment property.
He added, “When a customer thinks about buying a property and needs to obtain a loan to cover its price, he should search in several places and compare the interest rates offered. As the banks will examine several factors, such as the quality of the property, the amount of down payment, the credit rating, and so on.
The «Central» stressed that the customer should try to liquidate the offers of financial institutions to the lowest possible number, and then prepare to discuss the real estate loan with them, and prepare answers to their questions about the property, such as your income, expenses, assets, debts, and the amount of the advance payment of the price of the property, and the financial institution will register a claim On the property until the loan is paid off.
He pointed out that the customer has the right to ask his fundamental inquiries, to ensure that he knows his main obligations before signing, the most important of which are: the mortgage loan amortization period, meaning how many years it will take to pay off the loan, and the duration of the loan, which is the time period during which the bank will provide the loan, the mortgage loan agreement It usually ends after a period of time, for example, from one to five years, after which the customer may request to renew the loan for the period of his balance, repayment or transfer to another financial institution.
He pointed out that the customer has the right to know the annual interest rate on the mortgage loan and whether the interest rate changes, how much is the basic amount and the amount of interest that will be paid at the end of the term of the loan, how much is the value of the early payment fine for the mortgage, and what is the value of mortgage fees. It is also important for the client to know all the details related to fees and expenses such as: legal fees, evaluation fees, administrative fees, examination fees, registration of mortgage, fees for delaying payment, fees for delaying the payment due date, fees for changing the amount of the payment, fees for adding a lump sum and commercial fees Mortgage hand, find out any other fees.
He added that after comparing interest rates, fees and expenses, and the client’s approval of the mortgage loan, he will also get a multi-component agreement, and he must ask his lawyer to review it before signing, as it is a legally binding document once signed, and it is necessary that he understands what he approves.
He stressed that if the customer is looking for a mortgage for a rental property as an investment, he must ensure that rental income exceeds his costs, including the cost of borrowing and any service charges on the property, and the possibility that it will take time to rent the property.
The Central Bank demanded a comparison of the interest rates offered before obtaining financing.