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6 secrets of handling multiple credit cards

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A credit card is issued by a financial institution that lets you borrow money from a pre-approved limit to pay your purchases or any other expenditure. It looks like a rectangular piece of plastic or a metal card. The issue of credit cards depends on the credit score and the history of the customer. 

People often get confused between a debit card and a credit card. The basic difference between the two is, when you swipe a debit card, the amount is deducted directly from the bank account. On the other hand, the amount is deducted from the pre-approved limit when you swipe a credit card. Maintaining a good credit score is important, and the higher the credit score, the higher the limit.

A credit card is also used to pay for essentials or make online transactions. After applying for a credit card and borrowing money, make sure you repay the borrowed amount within the stipulated period. But while all that is understandable, what most people fail to deal with is multiple credit cards. That is why we will share about the same in this article below. Keep reading for more.

6 Secrets Of Managing Multiple Credit Cards in UAE

The list of advantages of possessing a credit card is endless, and many people keep extra credit cards to increase their credit score or get more benefits. Mentioned below are some quick tips that shall help you handle multiple credit cards easily and efficiently.

  1. Restrict Carrying A Balance

When handling multiple credit cards, avoid carrying forwarding of balance from the billing cycle to the next. The reward cards have high-interest rates and can come back as a nightmare if you forget to pay bills on time. Any interest you pay can offset the value of rewards you have earned with your credit card. 

Repayments of credit bills on time is necessarily important to avoid falling into a debt trap. Carrying a balance on a credit card can put you in a position where your credit score might get damaged.

Credit card utilisation makes up 30 % of your FICO score, and experts suggest keeping the utilisation below 30% to avoid damaging your credit score. 

2. Skip Cards Which Have Annual Fees

Running an expenditure with a credit card with annual fees can make things difficult down the line. Payment of annual fees means that you will be paying more than you would have paid for your purchases if you used cash. The user is considered a wise credit card user if they opt for no charge on annual fee cards in the UAE.

Credit cards without annual fees are known as free for life credit cards. In case you find a credit card that is perfectly suitable for you but has an annual fee, you can ask your credit card company to waive it off for you. Some famous free-for-life credit cards in the UAE are ADIB Value Card and ADCB SimplyLife Cash Back Card.

3. Select The Right Card For Your Purchase

Maximizing the reward points is one of the most tedious tasks of having multiple credit cards. It is essential to pay attention to each credit card’s features. The features include fraud protection warranty for travel insurance and many.

More. You can enjoy these features when you make a major purchase with your credit card.

Starting from travelling to shopping, different credit cards suit the needs of different people.

In the UAE, different types of credit cards are available like air miles credit cards, cash back credit cards, airport lounge access credit cards, travel credit cards, cinema offers credit cards and balance transfer credit cards.

4. Keep A Record On Your Purchases

Having a record of where you are spending your credit money is important, and it shall help you pay off your credit balance. To avoid penalty charges and be able to pay off your short term loan, reduce expenditure, and keep track of your monthly statement. If you do these, it will help you ensure the correct amount of transactions and gain bonus rewards offered by your credit card company.

The best way to keep track of your money while using a credit card is by building a monthly budget separating the expenses, creating space for savings, including the credit card’s payment in the next month’s budget, and tracking credit card statements every month. Use online banking to make your repayments on time hassle-free. Payment through a mobile application is also a good way of repaying.

5. Consider The Effect On Your Credit Score

It would help if you overlooked the impact of your credit score on your credit life. Your credit score and credit history are the most important factors to check when the lender approves the loan, and having a low credit score may make you ineligible for the loans. 

A higher CIBIL score indicates good credit history and responsible repayment behaviour. A healthy credit score can get you instant loan approvals, low-interest rates, home loans, car loans and higher credit limits. 750 and above is considered as an ideal CIBIL score.

6. Repay Your Balances On Time 

Paying off balances each month is essential, but along with that, monthly payments before the due date is also important. An online bill payment system can be ideal for you if you are forgetful, and this can make your payment easier, and you will cross your deadline. By any chance, if you miss your payment, you can ask your credit card issuer to waive off the fee. 

The credit card company is often obliged since it is your first late payment or a new card. Repaying balances on time can help you avoid penalty charges, which often affect your credit score. 

Advantages Of Having A Credit Card

A credit card is an indispensable part of life. It is convenient and has got multiple pay-back options. Credit cards provide unmatched discounts and deals for the user. A user can fall into the debt trap cycle if they do not use the credit card wisely. 

If you are a new user of a credit card, mentioned below is the list of advantages associated with the advantages of the credit card. 

1. Easy Access To Credit

One of the main advantages of possessing a credit card is accessing a borrowed fund easily. They run on a deferred payment basis, which means you can use the card now and pay later. When a credit card is swiped, the money is deducted from the pre-approved limit, preventing denting of your bank balance.

2. Construction Of Line Of Credit   

A credit card can be very important for any future loans you expect. The financial institution issuer checks the usage of credit cards based on its creditworthiness and approves loans to potential users. The banks also keep the check on the credit history based on card repayments and use of credit cards. 

3. Facility Of EMI

People often think of buying a great product that might eat up their savings. In such cases, credit cards can be used to defer the payment. There is also an option of paying off in monthly installments. Paying for expensive products like television or refrigerator can be cheaper through EMI than partying through a personal loan.

4. Amazing Offers And Deals

The credit cards are jam-packed with amazing discounts, offers and deals. They come in cashback, reward collection through points and much more. These can be redeemed only once when you swipe within the valid period. You can also get free flight tickets, vacations on any large purchases by vendors through credit card payment. 

How Does A Credit Card Work?

A credit card is a short term loan. When you use a credit card, you tend to use the credit card company’s money. The repayment of the loan depends on the timings issued. The company sets a pre-approved limit for the borrower to spend, and this limit is set depending on your credit score, income and account history.

When you make payments against your balance, the credit card is freely available to you again. The concerned company sends a detailed statement of your activity, balance, minimum payment and due date every month. 

The Bottom Line 

Possession of multiple credit cards can be of ultimate benefit to the people in today’s world. Large purchases credit cards are best suited to meet up with instant expenditures. Instead of applying for a personal loan to buy expensive products, payment to credit cards can be used. The facility of EMI has taken the credit card users on a roll. Plus, it is way cheaper than any other system.

Try to pay off the credit balances on time to maintain a healthy credit score. To enjoy the maximum benefits of a credit card, make sure the card is suitable for you. The UAE banks have multiple types of credit cards to suit the different needs of the people.  Also, do not forget to take a look at the above mentioned content for more details. 

How to get best personal loan rates

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A personal loan is an unsecured loan, which means it does not require collateral or a guarantor. An individual obtains a personal loan in the United Arab Emirates to meet a variety of personal financial demands, including weddings, higher education, overseas travel, starting a new business, and even debt consolidation.

Prior to applying for a personal finance loan, it is critical to research different rates of personal loans in different banks.

The highest personal finance loan amount is 20 times the monthly earning, with a 48-month repayment period. 

Personal Loan Eligibility Criteria

Every bank that offers personal financing in Dubai has different requirements for personal loans. However, the following are some of the most typical prerequisites for the finest personal loan in UAE:

  • Age Restriction

In order to qualify for a personal loan in the UAE, you must be at least 21 years old and between the ages of 60 and 65 years old.

  • Personal Loan Minimum Salary in UAE

To qualify for a personal loan, applicants must also meet minimum wage criteria, which vary from lender to lender in the UAE. You can apply for a personal loan in the UAE with a salary of 3000 Dirhams. The required minimum wage ranges from AED 2,500 to 4,000 and up. 

The income of a borrower is important in deciding the rate of interest. This is in relation to the one that will be applied to their loan. Such a thing is crucial as those with a higher salary are more likely to repay their loan in full than people with a lower salary. 

Another reason that pay is so significant is that most banks have a minimum salary requirement. For example, most banks in the UAE offer personal loans to those with an income of at least 5,000 Dirhams. Banks use this method to ensure that borrowers have a set minimum income that permits them to repay the loan on time.

  • Work Experience

You can’t get a personal loan if you don’t have a job. To obtain a personal loan in the UAE, several banks need applicants to be employed by UAE employers or to have completed at least a few months of service.

  • Residency in the UAE

Only UAE residents are eligible to apply for a personal loan in Dubai or any other UAE Emirate. However, some banks, such as ADIB, provide personal loans to expats. They have varying interest rates on personal loans in the UAE, as well as other restrictions.

  • Transfer of Salary

Banks in the UAE offer personal loans without or with a salary transfer. Some banks also allow applicants to make transfers to a bank of their choice, giving them the option of an easy personal loan in the UAE.

Personal Finance Loan Interest Rates (Jan 2022)

Personal Finance Loan Interest rate in the United Arab Emirates is a supplementary charge that is added to the principal loan amount. There are two types of interest rates that apply to personal loans in the UAE. They are Flat Interest and Reducing Interest.

  • Flat Interest

The overall loan amount is charged a flat interest rate that remains constant during the loan term. The lowest personal loan interest rate in Dubai and the rest of the UAE is 2.63 percent are with rates ranging from 2.63 percent to 22.22 percent. 

  • Reducing Interest

Unlike a flat interest rate, this rate of interest decreases with each installment paid by the loan borrower. The interest rate on a personal loan in the UAE is levied only on the outstanding principal amount of the loan, which can range from 5.24 percent to 39.99 percent. To receive the best personal loan, you should always compare personal loans online.

The personal loan interest rate and amount in the UAE are determined by factors such as the applicant’s source of income, credit history, age, and job status.

Personal Loan In UAE 2022

The United Arab Emirates has seen a massive increase in financial lending over the previous decade. In the United Arab Emirates, the advent of many banks and lenders has resulted in the introduction of competitive personal loan interest rates. The characteristics and advantages of these loans are listed below.

  • Unsecured Loans: These loans do not demand any type of collateral.
  • Loans to supplement your income: Borrowers can get top-up loans if they make regular payments on their existing loans.
  • Salary Transfer vs. Non-Salary Transfer: Borrowers can get large sums of money at cheap interest rates by transferring their salaries.
  • Interest Rates: There are two sorts of interest rates for UAE bank loans: reducing and flat.
  • Debit and Credit Cards: Some personal loans on the market come with free debit and credit cards.
  • Insurance or Takaful: An insurance or Takaful benefit covers outstanding loan payments in the case of a loss of income due to an unanticipated incident.
  • Cancellation of the loan: The best personal loans in Dubai and the other UAE Emirates allows you to cancel your loan within the grace period.
  • Cashback and Statement Credit: Some banks in the UAE reward the borrowers with incentives like cash back or a statement credit in a personal loan.

How To Get The Best Personal Loan Rates

The first step in obtaining a suitable loan with the lowest interest rate for a personal loan in the UAE is to shop around at various lenders to compare loans in the UAE before selecting the one that best matches your needs.

Borrowers can use an interest calculator to compute the interest amount they will be paying.

Use the formula- (interest rate/ number of payments) * principal amount = interest.

It can be difficult to obtain a personal loan in the UAE. Here are some pointers on how to get the best personal loan rates:

  • Maintain a Good Credit Score

Banks are always quick to accept a personal loan for those with a solid credit history. A good credit score increases the chances of acquiring a personal loan with favourable terms. Check your credit score, which is supplied by the AI Etihad Credit Bureau, before applying for a personal loan.

Banks favour people with credit scores of 700 or higher, so it’s only a matter of keeping your credit score there.

  • Utilize Seasonal Offers

 Banks occasionally provide lower interest rates to compete with the competitive corporate rates offered by rival banks. These schemes are especially popular during the holiday season and are only available for a limited time. Taking out a personal loan during these times can be quite advantageous and can help you save money on your loan.

  • Maintain A Strong Payback Track

 As you may be aware, banks use credit reports to assess your creditworthiness before giving a loan. This means they look at your payment history for other credit cards. So, if you want to get the best rate on your loan, it’s critical to have a good long-term credit history. You’ll be in a better position to negotiate interest rates if you have a good long-term credit history.

  • Checking and Reviewing the Types of Rate of Interest 

You should understand how your interest is calculated before applying for a personal loan. It’s not enough to look for loans with cheap interest rates. Although the stated rate may be the lowest, the computation does not take into account the gradual repayment of principal and interest.

  • Select A Personal Loan With A Shorter Repayment Period

The lower the interest rate, the sooner you repay the debt. This indicates that for short-term loans, banks or financial institutions will provide their best personal loan rates. The period of a short personal loan is three to five years or less.

If you take out a short personal loan, your monthly EMI would progressively rise. As a result, think again before making a decision. If you want to acquire the best personal loan rates, go for the shortest loan period possible. Keep in mind that it’s critical to keep your monthly payments under control.

Things to Remember When You Apply For A Personal Loan

  • Don’t submit a resume with a questionable work history.
  • To acquire the best personal loan in the UAE, thoroughly review the insurance terms.
  • Don’t speed through the application process. A single mistake can result in a loan being denied.
  • Try sustaining a lower debt-to-income ratio.
  • Don’t diminish your credit score because it will have a negative influence
  • Don’t miss a single episode.
  • Don’t apply for a new loan until the previous one has been paid off.
  • Don’t overlook eligibility requirements such as age, minimum wage, transfer, and so on.

A little reduction in your interest rate will enable you to save a significant amount of money and increase your savings. As a result, never pass up an opportunity to put the above-mentioned guidelines into practice, as they will assist you in obtaining the finest personal loan rates.

Check and compare personal loan providers in the UAE, including their requirements and advantages, to make the best option based on your personal loan needs and apply for the best personal loans at the lowest interest rate in just a few steps.

Best Rewards Credit Cards in UAE 2022 | Compare4Benefit

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Best Rewards Cards UAE 2021

Isn’t it just amazing if your credit card earns you some rewards?

Rewards credit cards are beneficiary cards that offer you extra benefits every time you spend money through your credit card. The main attraction of such cards is that they offer multiple rewards.

Living in UAE? Rewards credit cards are trending here too and many banks offer you rewards credit cards. Before you apply for a rewards credit card, read this article to know more about rewards credit cards and the best rewards credit cards in UAE 2022.

NOTE

  • Rewards cards improve your credit score.
  • The more you use a credit card the more is rewards.
  • Rewards follow certain terms and conditions.
  • Rewards are usually time-bound.

Rewards credit cards are more useful to people who pay using credit cards while shopping and dining. You must make sure that you have a good credit score for the approval of your rewards credit card application.

People who travel a lot are more likely to benefit through rewards credit cards.

REWARDS INCLUDE

  • Reward points
  • Amazon gift cards
  • Free / Discounts on movie tickets
  • Free access to airport lounges
  • Off on dining
  • Buy 1 Get 1 offers
  • Discounts on air tickets
  • Access to health and fitness centers.
  • Air miles
  • Cashback

To apply for a rewards credit card you must be 21 years old or above. You should have a minimum income of AED 5000. The necessary documents required areID proof, valid Emirates ID, or residential proof.

COMPARE REWARDS CREDIT CARDS IN UAE

  1. CITI REWARDS CREDIT CARD

Citibank Rewards Card

  • Minimum Income – AED 8000/month
  • Annual Fee – AED 0
  • Rate – 3.25%

Citi Rewards Credit Card is a good choice to earn rewards while shopping. The rewards can be redeemed on purchases ranging from Apple products to Amazon products.

 Key Benefits of Citibank Rewards Card

  • Thank You reward points [$1 = 1 Thank You points (local spend)/ $1 = 1.5 Thank You points (international spend)]
  • VoucherSkout credits
  • Free 12- month Amazon Premium membership
  • Free access to 1000+ airport lounges
  • Dining offers
  • Travel insurances
  • Discounts on movie tickets
  • Supplementary cards for family members
  • Access to Citi World Privileges
  • Balance transfer

Apart from gaining such rewards, this credit card allows you to pay with points online or through SMS. Offering you easy installment plans makes this card more valuable. Citi Rewards Credit Cards also allow you to avail cash loans easily.

  1. FIRST ABU DHABI BANK TITANIUM CARD

FAB-Rewards-Credit Car

  • Minimum Income – AED 5000/month
  • Annual Fee – AED 0
  • Rate – 3.50%

First Abu Dhabi Bank Titanium Card allows you to earn luxurious rewards. This card offers you exclusive benefits like chances to win an Audi Q5 or a trip to different parts of the world and many more.

It also offers you travel and lifestyle benefits.

Key Benefits of FAB Titanium Credit Card

  • Annual chances to win Audi Q5 (1 winner)
  • Semi-annual chances to win a trip (2 winners)
  • Monthly chances to win shopping worth AED 1000 (10 winners)
  • Access to airport lounges across the Middle East
  • Shop smart
  • Offers on movie tickets
  • Roadside assistance
  • Offers on dining
  • Air miles
  • Balance transfer

There are more rewards than these. But you should keep in mind that cashback categories have maximum caps and also to get rewards a minimum amount of expenditure every month is necessary.

  1. RAKBANK AIR ARABIA PLATINUM CREDIT CARD
  • Minimum Income – AED 5000/monthRAK-Titanium-Credit-Card
  • Annual Fee – AED 400
  • Rate – 3.45%

RAKBANK Air Arabia Platinum Credit Card is a good choice for you if you travel a lot. This card helps you earn a lot of rewards points.

Other than this it also provides great dining benefits, 0% easy payment plans, travel offers and insurances, exclusive offers on electronic products, furnishing, jewelry, and many more.

Key Benefits of RAKBANK Air Arabia Platinum Credit Card

  • Air rewards points
  • An annual fee will be relinquished from the second year upon meeting certain criteria
  • Privileges on dining and shopping
  • Discounts on Avis car rentals
  • Privileges in Air Arabia flights
  • Access to almost 10 airport VIP lounges in select countries
  • Free pickup and drop off (6 chances per year)
  • 3% of the minimum monthly payment
  • Privileges on Reebonz online shopping
  • Benefits on MyUS premium

These are the main benefits of the Air Arabia Platinum Credit Card. You get 15000 AirRewards points as a joining bonus. But this is possible only on retail transactions. And you must also be aware of the terms and conditions regarding each reward.

  1. HSBC ADVANCE CREDIT CARD

HSBC ADVANCE CREDIT CARD

  • Minimum Income – AED 15000/month
  • Annual Fee – AED 0
  • Rate – 3.45%

HSBC Advance Credit Card offers you a good amount of travel and lifestyle benefits.

If you have an advance account you can apply for this credit card.  The Air Miles reward is the major attraction of this card. You get 1 Air Miles for every spent AED 1.

Key Benefits of HSBC ADVANCE CREDIT CARD

  • Access to airport lounges
  • Privileges for dining programs
  • Discounts on travel
  • Complimentary valet parking
  • Complimentary HSBC ENTERTAINER app
  • Privileges on cinema
  • Balance transfers
  • Installment plans at low-interest rates
  • Protection benefits: card fraud and purchase protection

So before applying for this credit card make sure that you have an Advance Account. It is also important to know that there is a criterion of minimum expenditure for free valet parking and the Air Miles are valid only up to 3 years.

  1. EMIRATES NBD SKYWARDS SIGNATURE CREDIT CARD
  • Minimum Income – AED 15000/month
  • Annual Fee – AED 700Emirates NBD Signature Credit Card
  • Rate – 3.25%

Emirates NBD Skywards Signature Credit Card as the name suggests earns you Skywards Miles. If offers you a maximum 1.5 Skywards Miles per AED. You can redeem this Skywards Miles for different services like flight tickets, hotel accommodation, and other lifestyle needs.

Key Benefits of Emirates NBD Skywards Signature Credit Card

  • Skywards Miles
  • Free access to airport lounges
  • Free valet parking
  • Golf offers
  • Concierge service
  • Offers on dining
  • Cinema ticket discounts
  • Exclusive offers on Emirates Air Lines
  • Free car service registration and free pickup and delivery
  • Discounts on hotel booking

This card thus offers a wide range of travel and ground rewards. Along with such rewards this card also provides you with good banking services like easy installment plans and instant cash facilities.

  1. CITI EMIRATES WORLD CARD

Emirates Citi Rewards Card

  • Minimum Income – AED 12000/month
  • Annual Fee – AED 0
  • Rate – 3.25%

Citi Emirates World card along with earning you Skywards Miles gives you special Citi World privileges. These privileges are applicable across 95 countries and thus become an attraction to those who travel worldwide continuously.

Key Benefits of Citi Emirates World Credit Card

  • Skywards Miles
  • Access to airport lounges worldwide
  • Complimentary movies
  • VoucherSkout credits
  • Meet and greet services once a year
  • Free 12- month Amazon Premium membership
  • Careem chauffer benefits
  • Discounts on MyUS online shopping
  • Discounts on Avis car rentals
  • Travel insurance

Citi emirates world card also provides you with easy installment plans and instant cash loans. You must also be aware that even it waivers annual fee in the first year there is an annual fee of AED 400 from the second year.

  1. CBD TITANIUM MASTERCARD

CBD Titanium Credit Card

  • Minimum Income – AED 5000/month
  • Annual Fee – AED 0
  • Rate – 3.45%

CBD Titanium Mastercard is the best choice if you are looking for cards accepted worldwide and earns you rewards at the same time. The most important thing about this card is that it has no annual fees forever. Chip and pin technology incorporated makes it one of the favorites among rewards credit cards.

Key Benefits of CBD Titanium Credit Card

  • Earns you CBD Points Rewards
  • Discounts on Avis car rentals
  • Offers for dining
  • Cashback on Booking.com
  • Access to VIP lounges in select countries
  • Discounts on rentalcars.com
  • Offers on entertainment and leisure
  • Discounts on Careem rides
  • Access to MasterCard Priceless Specials
  • 24-hour client service

If you are planning to apply for a rewards credit card, go through the above information and choose the best one for you based on your salary, the purposes you use credit cards for, and the benefits these cards offer you.

So don’t miss your opportunity to earn rewards for every AED you spend.

FREQUENTLY ASKED QUESTIONS

  1. What are Rewards Credit Cards?

Rewards credit cards are beneficiary credit cards that offer you extra benefits every time you spend money through your credit card. You get some kind of rewards which you can make use to achieve financial benefits.

  1. What are the major rewards that Rewards Credit Cards offer?

Rewards can be of different kinds. They can be:

  • Reward points
  • Cashback offers
  • Discounts on select categories
  • Miles
  • Access to expensive services
  1. What is a joining offer?

Joining offer or welcome offer is the bonus rewards the banks give to their clients for opting for their products. These are usually chances to win a lot of win gifts like reward points or miles based on the joining fee or any retail transactions you make within a specific period. These can be redeemed to purchase things or to pay bills.

  1. What is annual fee?

The annual fee is the amount that the bank charges from a card holder every year to maintain your account. More the annual fees more are the benefits.

  1. How do I redeem reward points?

To redeem your reward points you should connect with your bank’s reward portal. They might provide you with options for travel tickets, vouchers, gift cards, or merchandise.

 

 

Best Personal Loans in UAE December 2021 (Updated) – Compare4Benefit

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Best Personal loans UAE 2021

This post contains all the relevant information regarding Best Personal loans in UAE

Looking for some little extra money?

If this situation sounds familiar, you may want to consider a personal loan.

If you are in search of a personal loan, you must ensure that you have the ability to pay back the amount you borrow.

Personal loan UAE - No Salary Transfer

Save your valuable money by paying off the loan at the earliest, if you can afford to. So plan things accordingly.

Your next big choice is going to be where to get your personal loan.

Infographic Uae Personal loan

We rounded up the most trusted and reputable personal loan companies, so you can count on getting the best rate and deal possible.

Find the best personal loans in UAE and compare rates and features and choose a loan based on your circumstances.

 

Popular Personal Loans in UAE  2021

Personal LoanInterest RateProcessing FeeSalary Required
RAK Bank Personal Loan3.18%1% of outstanding amount5000 AED
Citi Bank Salary Transfer Loan3.73% 1% of the finance amount8000 AED
Emirates NBD Personal Loan2.69% 1% of the finance amount5000 AED
Emirates Islamic Personal Loan3.99% 1% of the finance amount5000 AED
United Arab Bank Personal Loan2.87%1% of the finance amount7500 AED
Commercial Bank of Dubai Personal Loan5.50% reducing per annum1% of the finance amount10,000 AED
Standard Chartered Bank Personal Loan3.55%1% of the finance amount30,000 AED

Compare Personal Loans in UAE for December 2021

 

1. RAK Bank Personal Loan

 

RakBank Personal loan UAE

For people who need a large loan, RAK Bank Personal loan can be an ideal choice as they provide loans Up to 20 times of your salary.

This effective interest rate of 3.18% is easily one of the lowest in the market for 4 year loans.

Furthermore, RAK Bank personal loans may be a good fit for low-income borrowers, as they provide loans to individuals with salaries of at least 5000 AED, which is much lower than other banks.

Summary of Rak Bank Personal Loan Features

      ▣ Minimum Salary Requirement is 5000 AED
      ▣ Flexible Loan Payment Options.
      ▣ Salary transfer is compulsory to avail Rak Bank Loan.
      ▣ *Loan Payment Period is limited to 4 years. (5 Years for Armed Forces Employees).
      ▣ Free Rak Bank Life Time Free Credit cards.
      ▣ Top up loan is available with a tenure of 1 year.
      ▣ 1 % of the loan amount is charged as the processing fee.
      ▣ Flat interest rate is 3.19 %

                      Click Here to Apply for RAK BANK Personal Loan                     

 


 

2. Citi Bank Salary Transfer Loan

 

Citi Personal loan UAE

Citi Bank Salary Transfer Loan is likely one of the best options in the market for those who are looking for a High Finance personal loan in UAE and expect to be able to pay it off within 3 years.

 

They provide loans to salaried people without much obstacles and company listing is not a big factor unlike competitors.

For loans of 1–4 years, Citi banks’s effective flat interest rate is 3.73%. Citi bank also provide personal loan in uae without salary transfer.

Summary of Citi Bank Salary Transfer Loan Features

▣ Minimum Salary Requirement is 8000 AED

    ▣ Optional Insurance.
    ▣ Flat Interest rate is 3.73%
    ▣ Fast Approvals is the major advantage of this loan.
    ▣ 1 % of the loan amount is charged as the processing fee.

                Click Here to Apply for Citi Bank Salary Transfer Loan                        


 

3. Emirates NBD Personal Loan

 

ENBD personal loan transfer

Expats working in UAE consider applying for personal loans through Emirates NBD which offers the lowest income requirement for expats, 5000 AED of any bank in our review.This loan comes up with an exclusive loan return option.

Summary of Emirates NBD Personal loan Features

▣ Minimum salary requirement is 5000 AED.

▣ Great for Free bank account with no minimum balance required.

▣ Emirates NBD provides loan deferment option(can skip two non consecutive installments).

▣ Processing Fee is 1% of the loan amount.

▣ An Insurance Fee is charged on the Loan Amount.

▣ Insurance normally comes up with a double credit life coverage.

▣ Flat Interest rate is 2.69%.

                  Click Here to Apply for Emirates NBD Personal Loan                        


 

4. Emirates Islamic Personal Loan

 

EIB Personal Loan

Emirates Islamic Personal Loan is an Islamic Finance which offers finance amount of Up to 2 Million AED to customers.

 

They charge a lower profit rate and there is no over limit fee or any additional charges involved. The profit rate starts from 3.99%.

Summary of Emirates Islamic Personal loan Features

▣ Minimum Salary Required is 5000 AED for Salary transfer Loans and 10,000 AED for Non      Salary Transfer Loan.

▣ No Annual Fee Credit card for the first year.

▣ Fast and Simple Documentation, Approvals in 1 day.

▣ Processing Fee is 2.50% of the finance amount.

▣ Early settlement fee is 1% of the remaining principal amount to date.

▣ Islamic Financing Structure is followed.

▣ There is a Takaful fee involved in this loan which is 0.75% of the Finance Amount.

             Click Here to Apply for Emirates Islamic Personal Loan                     


 

5. United Arab Bank Personal Loan

 

United Arab Loan

If you don’t fall within the income bracket of 8000 AED  and above, United Arab Bank will be your best option with the flat interest rate of 2.87% per annum.

Buy out facility is available from other banks. This loan offers an option to postpone two installments in a year.

Summary of United Arab Bank Personal Loan

▣ Minimum Salary Required is 7500 AED.

▣ Top Up Loan Facility is offered by United Arab Bank.

▣ Loans up to AED 2 Million.

▣ Free credit card for the first year.

▣ Processing Fee is 1% of the loan amount.

▣ Early settlement fee is 1% of the remaining principal amount to date.

▣  Loan repayment up to 4 years.

                  Click Here to Apply For United Arab Personal Loan                         


 

6. Commercial Bank of Dubai Personal Loan

 

Cbd Personal LoanCommercial Bank of Dubai allows you to borrow up to 20 times of your salary. They also provide free life insurance to cover outstanding loan.

Competitive interest rates starting from 5.50% reducing per annum.

Summary of Commercial Bank of Dubai Personal Loan

▣ Minimum Salary Required is 10,000 AED.

▣ Huge Finance Amount to Expats and UAE Nationals.

▣ Free Life Insurance to cover outstanding loan amount.

▣ Processing Fee is 1% of the Finance amount.

▣ Personal Loan buy out is possible with or without topping up the loan amount.

▣ CBD offers deferment options to their customers.

     Click Here to Apply for Commercial Bank of Dubai Personal Loan     


 

7. Standard Chartered Bank Personal Loan

When you really really need a quick source of fund, Standard Chartered Bank offers fast approval personal loan.

 

You can get up to AED 2,500 cashback* post disbursal when you apply online. Interest rates starting from 3.55%.

Summary of Standard Chartered Bank Personal Loan

▣ Minimum Salary Required is 30,000 AED.

▣ 1% of the the finance amount is  charged as the processing fee.

▣ Maximum Finance Amount is 1 Million.

▣ Loan take over facility is available.

▣ Offers Installment Deferment Option( Twice in a year).

▣ Minimum balance requirement is waived during the loan period.

▣ Top-up loan facility is available.

        Click Here to Apply for Standard Chartered Bank Personal Loan            


Basic Documents required for Personal Loan in UAE

Personal loans require basic documents like:

  • Copy of ID card issued by Govt. or Labour Card.
  • Passport copy
  • Salary certificate
  • Emirates ID copy
  • Salary transfer letter
  • Bank statements from 3 to 6 months.

For self-employed:

In the case of personal loans for the self-employed, banks will ask for a minimum turnover or will check the average balance in your account for the last 6 to 12 months. Another factor is the length of your business. You will also need additional documents like:

  • Memorandum of association
  • Trade license
  • Audited Financials
  • Power of attorney of expat, clearly indicating borrowing clause (for the sole proprietor)

Tips for Seeking Personal Loans in UAE

personal-loan-uae-dubai

Obtaining a personal loan may seem like a tedious process featuring many potential pitfalls. Banks are experts in disguising harmful terms in fine print. Here are some tips for helping you secure the right loan:

  • Shop around

The first step is to shop around at various banks for the ideal interest rate and loan.

Often, your regular bank will not offer you good terms as they are interested in selling expensive products to their current client base.

Hence, by shopping around, you can gain the upper hand in finding the cheapest loan in the market.

  • Watch out for interest rate

There are two kinds of interest rates offered by UAE banks. These are flat-rate and reducing rate.

A flat interest rate implies that the amount of interest paid is fixed at the time of issuing the loan.

It does not reduce with the passage of time. This is an unconventional method used by banks to make interest rate seem lower than the reality.

With reducing interest rates, the amount of interest gets reduced every month, based on principal repaid.

  • Compare and review terms and conditions

The terms and conditions of the personal loan are as crucial as the interest rate. Certain terms and conditions include hidden penalties and fees. So compare personal loans before applying.

It is also vital to note the terms at which the loan can be repaid early.

It is a fact that most bank customers for personal loans have no clue about the interest they are paying, when the repayment will take place and what the terms of the bank are for early repayment.

  • Be aware of additional products

Some of the banks register you automatically for payment or credit protection insurance as soon as you borrow funds.

You must review the terms of the insurance to help identify whether you should stay with it or seek your own insurance policy.


Rules about Personal Loans in UAE from the UAE Central Bank                         

The UAE Central bank has stipulated some rules with regard to personal loans as follows:

  • Limit

The maximum quantum of personal loans has been set as twenty times the monthly salary or total income of the borrower.

This implies that your complete personal loan eligibility is 20 times your monthly gross salary.

For instance, if your monthly salary is AED 10,000, then you are eligible for AED 200,000 of personal loans.

  • Repayment period

The repayment period of personal loans must not exceed 48 months.

  • DBR (Debt Burden Ratio)

Deductions from regular income or salary of any borrower for all kinds of loans issued by banks or finance companies must not exceed 50% of gross salary and regular income from a specific or defined source at a time.

This rule applies to private housing and car loans, credit cards and overdraft facilities and also personal loans. DBR for retirees is fixed at 30% of pension salaries.

  • Security check

Finance companies and banks may only take from the customer, the number of post-dated cheques covering the installment and value not exceeding 120% of the value of loan or debit balance.

  • Loans to self-employed

Loans extended to companies and a sole proprietorship, secured by salaries of owners of partners will be treated in the same way personal loans are treated and will be subject to the same terms and conditions.

  • Loans for Armed Forces

DBR is fixed at 50%. In case banks do not adhere to such rules, the Armed Forces may transfer salary to any other bank, without referring to the bank which extended the loan.

  • Application forms

Personal loans can be extended as per application by the customer to be approved by the finance company or bank with a standard agreement.

  • Processing fee

This fee on personal loans cannot exceed AED 2500.


Processing of Personal Loan in UAE

UAE Personal Loan Process

The process of taking a personal loan is straightforward:

  1. You get in touch with a bank or finance company via any medium like a branch office, sales team, online service, etc., and express your desire to apply for a personal loan.

2. Bank will ask for the following documents: Duly filled form of application, valid copy of passport, valid copy of visa, copy of Emirates ID, Labour Card and Company ID,                bank statement of 3 to 6 months, the original letter of salary transfer.

3. After all this information has been verified by bank representatives, it is entered into the loan system, and documents are passed onto the processing center (Physically or electronically).

4. The officials at the processing center verify details and conduct credit checks like Etihad Credit Bureau checks, internal system checks, Central bank system checks, etc.

5. After this, the application is forwarded to the underwriter who declines or accepts the application after considering different aspects like if you fit in the internal policies of the bank, rules of the central bank, etc.

6. After this, the bank may place call verification at the office of your employer.

7. When the verification has been completed, your application is sent for issuing your loan.

8. You will be notified about loan approval and money will be credited to your account.


Why are Personal Loans rejected?

You have applied for a personal loan, but it is rejected. Some of the reasons for this are:

  • High DBR: If Your DBR exceeds 50%, you are refused a loan as per Central Bank rules.
  • Poor credit history: Banks can access your credit history via Etihad Credit Bureau. If you have not repaid other loans on time, your fresh loan will be rejected.
  • Irregular transactions in banks: In case your bank account exhibits irregular transactions such as full withdrawal of amount after crediting of salary, your personal loan request may be rejected.

In sum, to get positive approval of personal loans in UAE, you must keep up a healthy credit profile, a good bank statement, and not apply for loans in more than one bank. Because of the consolidation of records of all UAE banks at Etihad Credit Bureau, banks will now have access to your credit profile and your current outstanding applications.

Frequently Asked Questions on Personal Loan

  1. What documents do I need to apply for a personal loan in UAE?

You will need to have the following documents to apply for a personal loan in UAE :

  • Emirates id Copy
  • Passport copy
  • Salary certificate
  • Emirates ID copy
  • Salary transfer letter
  • Bank statements from 3 to 6 months.

2. Can a personal loan in UAE help me improve my credit score?

Yes. if you manage to build a strong payment history you can improve your credit score.

3. What is the benefit of a personal loan over a credit card?

The main benefit of getting a personal loan in the UAE is that interest rates would be lower compared to a credit card. A personal loan restricts how much you can spend, preventing you from going further into debt.

4. How much you can borrow with a personal loan? 

The exact loan amount available often depends on your salary, bank, and credit score.

5. Can I take a personal loan from two different banks in UAE? 

Yes. You should have a good credit score and your DBR should be less than 50%.

Mortgage Basics You Should Know But Are Afraid To Ask

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Mortgage FAQ- UAE

Investing in your dream home is a very big deal in your life. And the process involves meeting with developers and agents, browsing through the internet, talking with family and friends, visiting properties, and then making the final decision. All these things are exciting, but there is one thing that is often less exciting, financing your home. 

You need to choose the right type of mortgage in Dubai so that you can properly finance your dream home. If you are looking for mortgage options in Dubai and the ways to make the most out of it, then this guide is perfect for you. In this detailed article, we will be delving into details that cover the basics of a mortgage in Dubai. 

Mortgage Law In Dubai 

The Mortgage Law of Dubai implies property mortgage and property units as security for a debt, which is registered within the Dubai Land Department. It highlights that a valid lender should be a bank, financial institution, or company actively licensed and registered with the UAE 

Central Bank to offer property financing in the country. Additionally, the mortgagor needs to be the owner of the mortgaged property and have the right to dispose of the same. 

The law requires that only mortgages that are registered under the Land Departments on the real estate register or the interim register will be viewed as valid. The mortgage ranking is determined by the allocated serial number and time on the registration. In Dubai, only registered mortgages are considered lawful. 

Coming to the enforcement, the law mentions that any clause within the mortgage contract specifying that when the borrower is not able to pay the bet within a certain period, the lender can seize the title of that property or can sell the property without going through the enforcement steps stated under the law. 

The provision also mentions the execution process on mortgage property foreclosure, offering a streamlined procedure on default by any borrower. Following are the enforcement steps:

  • In case of default in payment by the mortgage borrower, the lender needs to provide him or her with 30 days of written notice via the Notary Public prior to going forward with the execution procedure.
  • Even within 30 days, if the borrower fails to pay the due sum, upon the request of the lender, the execution judge shall order an attachment against the concerned property. It will allow the property to be sold through a public auction adhering to the applicable procedure mentioned in the Land Department. 

Are You Eligible To Mortgage A Property In Dubai?

Irrespective of the type of property, to mortgage a property in Dubai, you must fulfill certain eligibility criteria. Following are the criteria you need to fulfill:

  • You must be between the age of 21 and 65
  • If you are salaried, you need to have a monthly income of at least AED 15K. 
  • If you are self-employed, your monthly income should be at least AED 25K. 

The minimum salary requirement for a mortgage can vary based on the bank’s policies. In fact, some banks allow UAE nationals to take a loan with a monthly income of AED 8K.

For self-employed individuals to get a mortgage, they must be running the business for a minimum of two years. It would be helpful if they already have an existing relationship with the bank. 

Moreover, some banks will only provide a mortgage to applicants who are working for certain predetermined companies. This implies that if you are working in a government company, financial institution, or multi-national company, your chances of getting a mortgage increase. 

However, if you are working for a less-established employer, you are likely to have problems getting a loan from some lenders even when you are creditworthy.

Expats can also avail of a mortgage in UAE, but there are certain criteria. You must have your existing job for at least six months or one year based on the lender’s rules. 

Additionally, it is imperative that you hold a clean credit history when applying for a mortgage because lenders will reject the applicants who have non-existent or poor credit files. So make sure you check your credit file and repair any issues before applying for a loan. 

And, if you have no history of credit, then you should consider investing in a credit card and paying the bill every month to establish some credit history.

Different Costs To Consider While Investing In A House In Dubai 

There was a time when high property prices made buying a home in Dubai a mere dream for many. But today, the development of affordable housing options and declining prices have allowed people to turn their dreams into reality. In fact, in some cases, the monthly mortgage repayments would come less than rents. Additionally, you will also enjoy the added advantage of capital growth on the asset. 

Having said that, you need to understand the overall costs associated with buying a home that goes beyond your loan repayment. There are various charges imposed by the government agencies like real estate developers or agents, Dubai Land Department, mortgage lenders, conveyancers, etc. 

Following are the costs that you should consider when planning to buy a house in UAE: 

  • Government Fees 

As we mentioned above, in UAE, all purchases are required to be registered with the DLD within 60 days of your transaction. And if you are unable to do the same, your purchase will be considered void.

Theoretically, the DLD charges, which are 4%, must be divided in half between the seller and the buyer. However, practically, the buyer ends up paying the whole 4% to the DLD. Additionally, the buyer also has to pay for the Property Registration Fee. When you invest in a home through a mortgage, you have to pay an extra fee of 0.25% of the overall mortgage value to the DLD. This is done to register your home loan against the property. 

  • Dubai Land Department Fees – 4% of the overall purchase value. Additionally, AED 580 admin fee is provided for offices and apartments, AED 40 for off-plan, or AED 430 for land. 
  • Dubai Land Department Mortgage Registration Fees – 0.25% of the overall mortgage amount along with AED 290. 
  • Property Registration Fee – AED 2000 along with 5% VAT for properties valued under AED 500,000. And, AED 4,000 plus 5% VAT for property valued over AED 500,000.
  • Mortgage Fees 

Banks charge a 1% mortgage arrangement fee along with 5% VAT. Additionally, buyers also have to pay a property valuation fee, which could range between AED 2,500 and AED 3,500 plus 5% VAT. The fees are payable directly to the bank. Some enable buyers to add these upfront costs to the mortgage to alleviate the stress of the initial financial expense.

 It is also vital to note that when investing in a property where the seller has a registered mortgage, the buyer will first have to pay out the seller’s mortgage to acquire the NOC or No Objection Certificate to process the property transfer through the DLD. Moreover, NOC states that the seller has paid off all the fees, and the developer has no objection to the subject sale. 

  1. Service Fees 

After the transaction has settled and furthered the property owner has been transferred, there is an extra expense to consider; service fees. You have to pay for the annual maintenance charges on the property to the Dubai Land Department, which is based on the RERA Service Charge and Maintenance Index. 

It determines a certain charge per square foot that differs based on the community. You can source the updated fees from the DLD official website. The amount is contributed to the maintenance of common areas of the community or building, for instance, security, swimming pools, landscaping, elevators, etc. 

  • Initial Deposit

For primary as well as secondary transactions, buyers have to pay a certain deposit in order to secure the purchase. In the case of ready property purchases within the secondary market, buyers have to pay 10% of the overall purchase price to the seller through a cheque. 

This amount is collected by the authorized agent who possesses the deposit until the property is transferred successfully. Additionally, where there is an existing mortgage registered against the property, the buyer needs to pay out the mortgage to apply for a NOC to acquire the title deed for the concerned property. 

  • Insurance Fees 

While home insurance is not mandatory, it is highly recommended. It provides you with protection against loss or damage because of accidents, theft, natural disasters, or fires. Life insurance is mandatory when taking a mortgage in the UAE. 

Premium payments of life insurance are continuous shot of mortgage homeownership that must be factored into the budget. Generally, banks charge it monthly, separate from the mortgage. They charge around 0.4% to 0.8% annually on decreasing mortgage balance.

However, some banks require the insurance policy to be paid in full for a year. Banks have their own life insurance policy underwritten by leading life insurance companies. But if you are looking for a cheaper option, you should consider getting an external life insurance policy. 

  • Home and Contents Insurance – Around AED 1,000
  • Life Insurance – Between 0.4% and 0.8% annually on decreasing loan balance

What Documents Are Needed To Acquire Home Loan in Dubai?

When you are applying for a loan in Dubai, there is certain paperwork that you need to submit to process the application. The documentation requirement differs from one bank to another. But generally, banks require you to submit the following documents:

  1. A copy of Emirates ID
  2. A copy of visa and passport
  3. A salary certificate to ensure employment 
  4. Banks statements and payslips for the last six months 
  5. Proof of residences like DEWA bill or tenancy contract
  6. The latest credit card statement 

What Is The Process Involved In Getting A Mortgage?

Following are the steps you have to go through to get finance in UAE:

  • Finding The Right Lender 

Home loans in Dubai are sourced via banks that are registered with the Dubai Land Department. You can either hire a broker to work on your behalf or directly approach the bank. When you hire a broker, you can leverage their knowledge and insight into the local market and extend available home loan options that would work best for you. It allows you to direct your efforts on finding the perfect home rather than juggling with the paperwork and other formalities. 

  • Selecting The Type Of The Mortgage 

There are different types of mortgages available in Dubai. They would comprehensively fall under the categories of fixed-rate and variable-rate loans. There are different factors that you must consider when deciding what type of mortgage is ideal for your circumstances. 

Some of the key factors are your lifestyle, the amount of loan you need, the property you want to purchase, the cash deposit you can pay. Generally, banks have dedicated online mortgage calculators that enable you to insert variables and get approximate monthly installments. 

  • Obtain Pre-Approval Letter 

This is the most important step of the process. A mortgage pre-approval letter is defined as an official document which is issued by the bank. It acts as evidence that you are eligible for housing finance. It highlights the maximum amount the bank will give you like a loan and offers better certainty of availing of a home loan. Typically, it will take three to five business days to get your pre-approval letter. 

  • Finding Your Property

Once you have a pre-approval letter and a budget, you can look for your home. A pre-approval letter is valid for 60 to 90 days based on the lender. Therefore, you have a sufficient amount of time to search for your dream property. You can also find your property first and then apply for a loan. But sometimes, you are not able to secure the entire amount of property value that you need to purchase. 

  • Finalizing Your Purchase

Once you have finalized the property, you can finalize the loan agreement with the bank. The bank is likely to assign a property evaluator to assess the value of the property and help you to make a good offer on the same. After you and the seller have agreed on a price, you can pay the deposit and determine a date on which you can complete the purchase transaction. On that date, the bank will release the amount to the seller. 

Taking a mortgage in Dubai does not have to be complicated. Above are some basic information that is very important in taking a home loan in Dubai. 

 

Top 10 Reasons To Use A Mortgage Broker

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If you are considering buying a house, then it is time to make that call and get pre-approved for a mortgage. Getting pre-approved lets the seller know how much money they can expect from you in order to purchase their property.

It also allows you, as the buyer, to know what your monthly payments will be and how much equity you have in this property. If purchasing a home is something that interests you, then we highly recommend hiring a mortgage broker.

Who Is A Mortgage Broker?

A mortgage broker is a person who assists clients with securing financing for real estate. A mortgage broker can help you find the best loans, rates, and terms to suit your needs as well as those of your lender.

A mortgage broker can help you to understand the process of buying a home. They will guide you through all the steps and paperwork involved, which is especially helpful for first-time homeowners who are not familiar with how things work.

Hiring a mortgage broker may also save you time in comparison to going directly to your lender or bank because they have many contacts.

What Are The Duties Of a Mortgage Broker?

A mortgage broker will help you to find a loan and negotiate the best terms for your situation. Some of their jobs may include:

  • Researching rates, comparing financing options, reviewing credit history
  • Administrating financial information such as income, debts, and assets
  • Explaining how lenders work with various types of loans
  • Answering questions about homeownership in general or specific transactions that are not straightforward so they can be discussed during negotiations. They also act as an advocate for clients who do not have knowledge or experience relating to mortgages.

Reasons To Hire A Mortgage Broker

Following are the reasons you should consider hiring a reputed mortgage broker:

  1. Financial Assistance

A mortgage broker can assist in finding the most affordable financial assistance for a customer.If you are looking to buy your first home, it is important that you do not go into this purchase blindly without understanding what prices and payments will be like. A mortgage broker will help guide customers through all of the steps involved with getting approved for a loan and provide them with reliable information about interest rates on each type of loan they might want. 

They’ll also review the property’s value, past sales data from recent comparable properties and talk about down payment requirements before giving advice on how much money needs to be saved up beforehand if buying a particular house becomes an option.

As stated earlier, one reason homeowners choose to hire brokers over banks or other financial institutions is that they provide expert advice. This means that customers of all levels will be able to get the help they need in order to make a sound purchase decision and avoid making any costly mistakes when it comes time for them to buy their first home.

A mortgage broker can also offer assistance with finding affordable homes, obtaining good interest rates, reducing monthly payments on loans, getting short-term financing solutions for recent college graduates who are working but don’t have enough money saved up yet, and more.

It’s important not only for those needing credit history improvements before qualifying for mortgages but also those looking at starting over after bankruptcy has occurred in the past too. A qualified real estate professional will be able to guide you through the process and help you avoid any pitfalls or costly mistakes.

Strong credit history is essential for anyone looking to put in an offer on a new home, but it isn’t always easy to build up that kind of record without first starting out with some other form of financing like student loans.

This makes mortgage brokers even more useful because they can work with customers who have less than perfect histories in order to qualify them for their desired loan type anyway, whether it’s conforming mortgages, subprime mortgages, insurance rate or any other information.

2. Expertise of Mortgage Broker

A mortgage broker will also be able to help customers with any other questions they might have about their homes as well. They are experts in finding the best rates, down payments, and loans for individuals’ particular financial situations so that all homeowners can get what they need from a home loan regardless of how much money is saved up or if there are past mistakes on one’s credit history.

Mortgage brokers spend most of their time researching new developments when it comes to mortgages, getting familiar with the latest regulatory changes, and staying current on popular interest rates available both locally and nationwide; which means that customers who decide to hire them for assistance won’t be relying on just anyone for advice but an expert in this field instead. 

This makes the decision even more worthwhile in the long run and ensures that customers will be getting help from someone who can provide them with all of the information they need to make sound financial decisions.

They have access to a huge network of lenders, banks, credit unions, and other entities, which means that homeowners are able to take advantage of many different types of loans when they decide to work with brokers rather than just sticking with one bank or institution for assistance. 

This also comes into play when it’s time for refinancing as well because this allows customers to choose various institutions based on their needs at any given moment instead of being stuck with just one company, as some people might think is necessary otherwise.

A mortgage broker is worth hiring if you want expert advice, affordable homes, good interest rates on loans that easily suit your needs, and short-term financing solutions for recent college graduates who don’t yet have enough money saved up. This is also the best option if you are looking to start over after bankruptcy has occurred in the past and need someone with a strong credit history as well as when it’s time for refinancing too.

3. Negotiate On Your Behalf

A good broker will be able to negotiate on your behalf and advocate for you during the process. They are professionals who have a lot of experience working with banks, lenders, and other financial institutions, so they know how to get what they want when it comes time to sign paperwork or close the deal on this new home purchase.

It’s important not only for those needing credit history improvements before qualifying for mortgages but also those looking at starting over after bankruptcy has occurred in the past too. A qualified real estate professional will be able to guide you through the process and help you avoid any pitfalls or costly mistakes.

4. Streamline The Loan Process

Mortgage brokers also streamline the loan process so that it doesn’t take as long to get everything finalized and ready for the go-ahead. This is because they are typically working with many different institutions at once, which means customers won’t have to wait around or do all of the leg work themselves before getting approval from one company alone.

It’s much more efficient, convenient, and less time-consuming this way while still providing them with top-notch service and support in regards to their financial needs, even if those needs include credit history improvements on a new home purchase too.

5. Access To Good Lenders

Those who use a mortgage broker have access to all of the good lenders out there, not just one or two. This ensures that customers are able to compare the rates from various institutions and find those which best suit their needs without having to go through all of this research themselves before speaking with representatives for these companies.

It’s an invaluable service in terms of saving time as well as ensuring that they will be getting some expert advice during every step along the way, too, even when it comes time for refinancing after a few years down the line. Those who need help finding affordable homes should also utilize brokers because they can provide assistance on where is the cheapest place for them to live based on what type of loan they qualify for, how much they have saved up, and their current job status.

6. Flexibility In Execution

A good broker will also offer flexibility in execution so that you can get what you want as quickly as possible. This not only includes when it comes to finding the best rates and terms but if a customer needs short-term financing solutions for recent college graduates without any money saved up yet or help with credit history improvements too.

If someone is looking at starting over after bankruptcy has occurred in the past, then this is an excellent option because brokers are well versed in how to make things happen on behalf of their clients during those times; even when it’s time for refinancing down the line which again takes some pressure off of them.

7. The Application Will Be Approved At Once

The application will be approved at once. This is because the broker always has a direct line of contact to speak with lenders and financial institutions, which means they can answer questions about applying for mortgages, what types are available, or anything else that may come up in regards to this process too; even when it’s time for refinancing down the line.

Having someone knowledgeable on their side who advocates for them during every step along the way from start to finish ensures that customers will have peace of mind knowing everything was done correctly while also saving themselves valuable time.

What To Look For In a Mortgage Broker?

Following are the things that you need to consider when hiring a mortgage broker:

  • Experience Of The Broker

The mortgage broker should have the necessary experience in this arena. He or she should know the ins and outs of mortgages, as well as all other aspects that are related to them, such as taxes on property sales, for instance.

A good mortgage broker is likely to be able to analyze your situation quickly and offer relevant information without you having to spend hours online researching everything yourself.

He/she should also share unbiased advice with regards to options available and what they will mean for you in particular – whether it’s about choosing between fixed-rate vs. adjustable rate mortgages or if refinancing is an option at all given your financial circumstances.

  • Reputation Of The Broker

The best mortgage brokers have a reputation that precedes them. They’ve been in the business long enough to know how it works and what they need to do. These brokers are professional, ethical, and honest about their work.

As you search for your ideal broker, keep these factors in mind: Ask around-ask friends or colleagues who they use when looking for a loan; ask other professionals such as lawyers or realtors if they can recommend someone based on their own personal experiences; visit LinkedIn profiles of those with established careers to see what people say about them at face value (this is not always full disclosure, but it’s worth considering); read reviews of each candidate online by past clients-what did others say? What does the company say about itself?

Reviews from the public and professionals within the industry are a great way to find out more information about each candidate. It is worth taking your time in doing so, as it can make all the difference down the road.

  • Check For References

Once you have a few candidates to work with, be sure to ask for references from their previous clients. You can call these people up and speak directly about the experience they had working with your broker-this is an invaluable service that most brokers will offer as it speaks volumes about them.

If there are any complaints at all, then move on or carefully consider what was said and if it’s something worth looking into further before making a final decision. It’s also helpful to find out how long they’ve been doing this experience.

Asking someone who has worked closely with the individual should give you some good insight into whether or not they’ll make a decent choice for your mortgage needs.

A great way to know if you are dealing with a reputable mortgage broker is to speak with their references, ask about how long they have been in the business and what kind of experience they have had.

Conclusion

If you are trying to buy a house in Dubai, the expertise of a mortgage broker can be invaluable. The broker will leverage his or her experience in the field to ensure you get the best deal in the market.

6 Tips To Pay Off Your Mortgage Quickly – Compare4Benefit

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7-tips-to-pay-off-your-mortgage-quickly

Paying off your mortgage is a huge accomplishment. If you’re tired of making monthly payments, then this blog post will provide some tips to help you pay down your mortgage quicker. 

1. Choose A Low-Interest Lender

Choosing the right mortgage lender is one of the most important and complicated steps in paying off your home quickly.

Choosing a low interest rate with an accelerated repayment plan can make all the difference, so it’s best to spend some time researching which lenders are currently offering lower rates than what you currently have. 

If you’re looking for more help deciding where to get a new loan or how much house payment you can afford, consider talking through these decisions with someone who works specifically in this field:

A professional financial advisor will be able to explore options that work well for your individual situation and provide personalized advice on how to pay off your mortgage quicker.

For those of us who don’t want any additional stress, they can also help you make confident decisions about your mortgage without the need to do any additional research.

2. Pay Higher EMI

One of the most important things that you can do to pay off your mortgage quickly is to increase your EMI. You may not be able to afford a higher monthly payment, but there are ways in which you could make it work for you. 

If your salary has increased and inflation is low, consider switching over from a 12-month EMIs (equal monthly installments) to an 18-month payoff plan or vice versa. This will ensure that more money goes towards paying off the loan early into its term than if you were on a standard repayment schedule during this time period.

If at all possible, try increasing payments by making one larger lump sum payment instead of smaller ones each month – even if only temporarily until something changes financially. If you have a spare house that is not rented or occupied but rather vacant, consider selling it.

This will help increase your monthly cash flow and allow for more money to be used towards the mortgage loan.

If this isn’t possible, try getting a second job outside of work hours if possible, which would add income while also decreasing time spent at work each week.

If the individual cannot do this, then they can start looking into organizing their finances so as to spend less on things like entertainment and travel – both expenses could be cut down significantly without affecting the quality of life too much. 

You may need to look into other financing options such as refinancing though in order to make up for any difference from these expenditure cuts (i.e., if you are unable to find a second job and need to cut costs).

3. Refinance Your Mortgage

Refinancing your mortgage, known as refinancing or re-fixing in the industry, is a way of paying off your loan more quickly. Some mortgages can be refinanced to make monthly payments less and/or extend the length of time it takes for you to pay back what you owe on the house.

If you want an even quicker payoff than that, there are other ways to refinance. But if you are considering a refinance, there are things to consider.

If your credit score is good enough, some lenders will let you include your home as collateral for the new loan. This means that they’ll give you money at more favorable terms and rates than what’s currently available in the market because of their confidence that they can eventually take back ownership of it from you by foreclosing on it in case your monthly payments become late, or something like that happens. 

You may have to pay an upfront fee or origination fee (the amount charged when someone takes out a mortgage), but this could help lower interest charges over time since other mortgages typically only charge interest on the original balance being borrowed (or sometimes nothing) instead of the whole loan.

4. Rent Out Space in Your Home

If you’re not living in your home, it might be easier to afford the mortgage. Consider renting out a room or even the whole house and use that income to pay off your loan faster. You can rent an Airbnb for a weekend trip if you live close enough to major urban hubs with high rents already.

If you have more space than one person could occupy at once, consider listing some of those rooms on sites such as Airbnb, so they are occupied most days during the week by people traveling through town without needing full-time housing arrangements (in other words, short term rentals).

This will make up a significant chunk of what is owed each month on the mortgage while still providing you with a space to live in.

If renting out rooms or the whole house isn’t an option, consider putting it on for sale and use that money toward your mortgage payment instead. You will still be able to make monthly payments on the home until someone purchases it from you while also reducing what is owed each month by selling at a higher price than what’s owed currently due to interest rates being lower when they sell their own place. 

Either way, you’ll have additional funds coming in every month, which can go straight towards paying off the loan balance without having as much of a hit taken out of your paycheck since there are no other expenses associated with living elsewhere like utilities, food, transportation costs, etc.

5. Purchase A Home You Can Afford

If you plan on living in your home for a while, then it’s best to buy one that fits within your budget. That way, you can start saving money right away and have an easier time making payments each month. Plus, if the market changes or something happens with work or other finances, you’ll still be able to afford what was once out of reach.

  • Be Careful About Buying A Home You Can’t Afford – Be realistic about how much house is available at your price range.*
  • Don’t Get Distracted By The Extras- Keep basic amenities intact like electricity and plumbing before adding anything else onto the list of desired features.
  • Maintain Your Budget And Save For Down Payment- Remember to save for the down payment and have a budget in place that is realistic.
  • Consider A Home Warranty- When purchasing a home, always purchase homeowners insurance as well. This will protect your investment from damages or accidents like fires or floods. Plus, it can be offset by tax deductions if you’re looking to make an expensive purchase.

6. Save And Invest For Your Down Payment

To get ahead on paying off your mortgage quickly, set up automatic transfers into a savings account every month so that money doesn’t go towards other things. Another option could be investing this part of your income into stocks with dividends – these will let you earn more cash without having any risk.

Mistakes To Avoid When Taking Home Loan In UAE

To make the most out of your mortgage, you should avoid the following mistakes:

  • Applying For Mortgage That You Cannot Afford

There are certain mistakes that you will need to avoid when taking a home loan in the UAE. For example, if you cannot afford the mortgage and it is too big for your budget, then this can be a mistake because there is no point in applying for an expensive mortgage that may cost more than what you have saved up for. 

Secondly, do not apply for a very long-term repayment period as this could also end up costing higher interest rates which might leave you with less money at the end of your term.

  • Mistake Of Not Getting Sufficient Mortgage Insurance

One of the mistakes many people make is not getting sufficient mortgage insurance. It’s important to know what your risk tolerance and financial situation are so you can protect yourself by buying enough coverage.

It’s also important to know what your mortgage insurance is. Your lender might not be willing to tell you the precise details of the coverage, but they should give you a clear idea of how much money will go towards premiums and how much goes into reserves for when you no longer have an income stream due to retirement or disability.

You may want to consider interest-only mortgages if it’ll help with debt reduction since these loans can often make monthly payments lower than fully amortized ones. It’s good that most lenders require a 20% down payment on the purchase price in order to qualify for this type of loan, so there aren’t any surprises about costs later on. You should always consult with your professional financial advisor before making any decisions concerning your mortgage.

  • Choosing The Wrong Loan

The first thing to look for in a mortgage is whether it’s the right one. There are two types of mortgages: fixed or variable interest rates. Fixed-rate loans have lower monthly payments, but you won’t be able to take advantage of when market conditions change and make it cheaper (or more expensive) to borrow money from your bank. 

Variable-interest loans allow you access to these opportunities and can end up being less costly over time if they’re set with an initial low-interest rate that gradually increases as the term grows longer. A great way around this dilemma is choosing adjustable-rate mortgages – ARM where the borrower chooses their own target interest level each year, which changes based on how much inflation there has been since they last made adjustments.

  • Not Reviewing Your Credit Score Before Applying For Home Loan

When you are applying for a home loan, it is important to review your credit score. Your score can have an impact on the interest rate and even what type of mortgage plan you qualify for. Lenders often use this information when deciding whether or not they will approve your application. 

It’s also wise to check your credit report before the approval process starts so that any misinformation contained in these reports does not affect your ability to get approved for a loan with favorable terms.

  • Not Comparing Home Loans Before Buying Your Home

When you are shopping for a home loan, make sure to compare the different types of loans available. Your mortgage company will be able to tell you what type of plan is best suited for your needs and can advise on which lenders offer these plans. 

You may find that there’s more than one option that meets your requirements, so it helps to have an unbiased opinion about which lender might be right for you before making any decisions. With a little bit of research, you can find out which loan is the best fit for your needs and save yourself money in the long run.

  • Not Checking EMI Affordability

Some people might be tempted to buy a home without checking the monthly payment. This is risky because some homes are more expensive to maintain than others, and you could end up in over your head with higher-than-expected costs. 

You should also make sure that the property taxes can fit into your budget so that you don’t have them negatively impact other aspects of your finances. If there is any chance one or both of these expenses will increase in the future, then a different type of mortgage plan may work better for you instead.

  • Avoiding Overall Cost Of Buying The House

It is smart to consider the overall cost of buying a home when you are looking at different mortgage options. This includes things like taxes, insurance, and property upkeep costs that can affect your budget in different ways depending on where you live and how much it will cost each month. Be sure to shop around for homes with lower mortgages so that you have more money left over after making monthly payments.

  • Not Paying Attention To The Fees

A home loan is a big decision, so it’s important to look at all the different factors before making your final choice. One of these factors is how much each lender will charge in additional fees on top of the interest rate and monthly payment. You should always compare this figure when you are looking for loans from different lenders – it can have an effect on the total amount that you end up paying back over time.

Just like any major purchase, buying a house comes with its own set of expectations and responsibilities. When searching for new or refinanced mortgages, make sure to check out all your options so that you don’t have unpleasant surprises later down the line.

How to Get Approved for your First Mortgage in UAE – Compare4Benefit

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how-to-get-approved-for-your-first-mortgage

Mortgages in the United Arab Emirates are easily available for people looking to invest in property or buy a new home. There are two ways you can invest in a property in the UAE – on a mortgage or with cash.

While cash investments can prove to be cost-effective, mortgages allow for greater flexibility in terms of how you repay and manage your finances.

UAE is a fantastic destination for professionals and families alike, with a range of career opportunities and all kinds of activities for all interests and ages.

So, those looking to settle may need a new family home, and mortgage providers are well-equipped to deal with all kinds of mortgage applications – whether expat, non-residential, or residential. 

Before you finalize the property, it is important that you understand how mortgages in the UAE works, the types of mortgages available in the market, and the steps required to get one set up. 

This comprehensive guide explains to you the prerequisites to get your first mortgage. 

Mortgages in the UAE 

The United Arab Emirates has become one of the most popular destinations, especially business-friendly regions like Abu Dhabi and Dubai. With an increasing population of foreign nationals and ex-pats, the mortgage market in the UAE is well-established, with both local and international lenders offering mortgage loans.

Please note that UAE is offering both buy-to-let and residential mortgages for people living in the country. Nevertheless, different mortgages have different criteria. 

There are dozens of different mortgage providers in the UAE, from globally known brands to more localized financial institutions. The range of options you have means that you need to do a lot of research in order to understand how the different products work. This helps in making an informed decision. 

How Easy is it to Get a Mortgage in the United Arab Emirates? 

It is indefinitely a big decision to buy property in the UAE. While finding your dream home or property in the UAE is not much of a hassle, getting a mortgage loan to purchase the property involves some challenges. 

Whether you are an expat or a permanent resident of the country, there are some eligibility requirements that you need to fulfill to get approval for your mortgage. Overall, you may be faced with some challenges. 

  • New to the UAE 

If you are an expat, then banks are very particular about certain things. For approving any kind of loan, whether it is a mortgage loan or even a personal loan, the financial institutions in the country take note of several factors.

For starters, the time you have been living in the country and the length of employment, all will be noted. If you have just landed here, your application won’t even be processed. The minimum length of time you need to spend in the country before applying for a mortgage loan is between 6 months and 1 year.

Most importantly, banks check the length of your service at your current employment, which also needs to be at least 6 months. 

  • Employment Sector 

If you are a UAE national or an expat, if you have ever applied for a loan in the country, you will be well aware of one of the most important requirements – your employer company has to be listed with the financial institution in order to mitigate the risks of lending.

Although the majority of multinational companies and all the government sectors are listed with the banks, some companies are not. So, even if you meet all the eligibility criteria on the loan and have a good credit history, your mortgage loan will not be approved if the employer is not approved by the bank.

On the other hand, if you are self-employed, your length of business is considered, which is required to be at least 2-3 years. Please note that if you are applying for a mortgage with a bank that you have a savings/salary account with, your chances of getting the approval is increased.

  • Monthly Income/Salary 

You will have to meet the minimum monthly income requirement to get approved for the mortgage. Whether you are an expat or a UAE resident, the minimum monthly income requirement of AED 15k is a must for salaried employees and AED 25k for self-employed. However, different banks have different criteria.

And most banks approve adding a co-applicant. That is, you can add your spouse as a co-applicant for the mortgage. This helps in meeting the eligibility requirements with ease and increases your chances of getting a mortgage loan. 

  • Documents 

The documents required for mortgage loans are almost the same for expats and nationals, except for some identity proofs. If you are an expat, you are supposed to provide your UAE resident visa and passport for verification, including other documents like bank statements for the last 6 months, trade license (for self-employed), salary certificate, Emirates ID, and other documents as requested by the bank. Loan approval is not going to be an issue as long as you have all the documents. 

  • Credit History 

Last but not least, your chances of getting a mortgage loan in the UAE significantly rely on your credit score. In general, a credit score can make or break your loan application. At the time of applying for a mortgage loan, the bank will gather your credit score from your financial history, which includes details like outgoing and incoming cash flow and any history of loans.

Poor or non-existent credit score results in your mortgage loan application getting rejected. So, it is advised to start building your credit history by getting a credit card and paying the bills on time. 

What are the steps in the mortgage approval process? 

As said, the lending process varies from borrower to borrower. Now you know that there are several factors that go into the play for mortgage approval, your experience might be a little different from what other applicants experience. Nevertheless, the following are the steps that usually takes place before your mortgage loan is approved by a bank in the UAE: 

  • Mortgage Pre-Approval 

Mortgage pre-approval is when the financial institution reviews your finances, such as your income, debts, assets, to determine whether you are a good candidate for a mortgage loan. Based on their analysis, they will also tell you much of a loan they are willing to lend you with a pre-approval letter. At this stage, the bank will also check your credit score. 

  • House Viewing and Purchase Agreement 

Once your mortgage loan is pre-approved by the bank for a certain amount, you have a price range under which you can shop confidently. The bank will not be involved with the type of property you purchase. 

  • Mortgage Loan Application

In this step, you need to fill an application form that asks for information about the type of loan being used, the type of property being purchased, and details of the borrower. 

  • Mortgage Processing 

Once you have completed the loan application and have a purchase agreement in place, you will move into the processing stage. This is an important step where the bank collects a variety of documents relating to you and the property you are purchasing.

The bank will review the documents to ensure that the paperwork is complete for the underwriting process. Once again, your credit report will be checked, and a home appraisal will be ordered to determine the value of the property. 

  • Mortgage Underwriting

An underwriter is a key entity in the mortgage loan approval process. He/she has the power to reject a loan application if it does not meet certain pre-established criteria.

The role of an underwriter is to double-check the application and documents to make sure that both you and the property match the eligibility criteria for the specific loan. He/she will also evaluate the risk associated with the loan. 

  • Mortgage Loan Approval Closing 

When everything’s in place, and the mortgage underwriter is happy with your application, he/she will label it “clear to close.” It signifies that you have met all the requirements, and now the mortgage will be transferred, and the approval process will be closed. This is the final step of the mortgage loan approval process. 

Mortgage Fees 

Applying for a mortgage in the UAE means that you have to have fees to pay. This includes administrative fees and legal fees. The amount you will have to pay will depend on your circumstances. Nevertheless, when you add all the fees altogether, it can turn out to be a costly transaction. 

In the United Arab Emirates, when you are applying for a mortgage, you can expect to pay a significantly large deposit and fees, including the following: 

  • Loan protection insurance or mortgage insurance, which is compulsory. However, how much you have to pay will vary depending on the value of the mortgage and your property, including any other personal circumstances.
  • Bank charges, such as insurance registration fees, property valuation fees, and mortgage processing fees.
  • Mortgage registration fee, which is 0.25% of the total value of the mortgage. 

Depending on your application and situation, you may find other costs and charges associated with your mortgage, both in terms of the cost of arranging the loan and the taxes applied.

Nevertheless, it is the deposit you have to pay to secure the mortgage that will be the major initial outlay. In the case of buying an off-plan property in the UAE, this deposit amount could be up to 50% of the total cost of the property. 

On the other hand, if you are a foreign national and your main account is outside of the UAE, you might have to send money to yourself from abroad to pay the incidental costs and fees. When making an international money transfer, you will be charged a processing fee, which will be a certain percentage of the amount you are sending to your UAE account.

Banks in your home country may not offer good deals and may charge high processing fees and interest. Even if they promise to offer fee-free money transfers, the exchange rate is going to be so extensive.

Whatever your situation, you will incur costs, and that too in huge amounts. So, it is always advisable to keep an eye on the additional charges that you will be asked to pay. The best thing to do is shop around to find the best deals. 

Tip for First-Time Mortgage Buyers in the UAE 

Applying for a mortgage in the UAE is one of the most important financial transactions you will make in your life. Whether it is to purchase a family home or invest in a property for business purposes, you could use some tips that will help you in making informed decisions. 

  1. Understand the market and get accustomed to the workings of the United Arab Emirates real estate market and loan market. The financial and real estate market in the country is quite different from other countries. Therefore, you need to ensure that you have a real estate agent by your side throughout the process to guide you in making a considered decision.
  2. Understand your mortgage and enquire about how it works in your case. For off-plan payment plans, the developer offers plans where either a portion of the purchase value is paid pre-handover, and the rest after the completion or 100% of the purchase value of the property is paid pre-handover.
  3. Always compare rates by shopping around. There are hundreds of banks in the UAE offering mortgage facilities. So, look for interesting offers and choose a bank that suits your financial standards.
  4. Some banks in the UAE will give you a preferential mortgage rate if you undertake a salary transfer.
  5. Understand the mortgage application and don’t sign anything before you have thoroughly read it and understood it properly. 
  6. Keep the liabilities to a minimum to make sure that you can afford a mortgage.

Conclusion 

This is everything you need to know about getting approved for your first mortgage in the United Arab Emirates. As a first-timer, it can be a little overwhelming for you to take a mortgage. But it will help you in the long run if you make regular repayments. Overall, you should consult with a professional who can help you understand how things work here. 

Rent to Own Schemes in Dubai – Money Clinic | Compare4Benefit

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Rent to own schemes in Dubai

To save yourself from the initial financial pressures of property buying, you can utilize the concept of rent to own schemes in Dubai.

The property market in Dubai holds great opportunities for buyers. But the initial cost becomes a troubling factor for many.

You are supposed to have about 25 percent of the total property cost saved along with an amount that covers all the initial costs related to property buying in Dubai. This surely puts significant pressure on your pocket.

What are rent-to-own schemes?

Living as a resident in Dubai requires you to rent a place, if not buy one. Every month you have to pay a certain amount as your rent. With RTO or Rent to Own schemes in Dubai, you get a chance to utilize those rent payments as loan payments to own a place after a while.

Your rent every month turns into the home buying equity after the completion of the pre-decided lock-in period.

This scheme turns your rents into well-structured installments or payments towards property acquisition.

At the end of a particular lock-in period, you can utilize a mortgage or any other method of completing the rest of the installments until the complete acquisition of the property.

Rent-to-own schemes also require an upfront payment when buying a property in Dubai. However, this amount stays way lower than the 25 percent of the overall property cost.

It is common to attain the advantage of RTO schemes with only 5 percent of the total property cost. The conditions of an RTO scheme can change, depending on the contract between a buyer and a seller.

Working of Rent to Own Schemes in Dubai

The concept of RTO scheme is highly beneficial for people who find it overwhelming to save a huge amount of down-payment money for property acquisition. Even in the situation of difficulties in mortgage approval, the rent to own scheme becomes a reliable choice.

It is important to realize that such schemes bind you in longer agreements of the lease. You might be paying a lease for about 2 years, 3 years or a longer period. The good thing is that your rent stays fixed during the first few years, which gives a perfect foundation to pick the right property to invest in via RTO schemes. However, the rent may increase after you finish the lock-in period.

With the Dubai Land Department, it is possible for a financer and property buyer to register in RTO schemes. It creates a contract, in which, the property buyer is supposed to give payments to the property financer.

It is pretty similar to the bank-based mortgage services. At the completion of your contract period, you attain the ownership of the property as a buyer.

Potential rent to own scheme agreements

There are two major kinds of rent to own scheme agreements popularly used among property buyers and sellers.

  1. Agreement with an option to buy

In this type of agreement, you put an option to buy a rented property in future. So, you can decide to buy or not buy a property in future. This type of agreement requires an additional “option fee” from your side.

This option fee is usually a small percentage value of the total price of the property. This amount gives you the ability to make the property purchase after some time.

If in future you decide to buy the property, the developer or owner has to sell that property to you only. The already paid option fee gets deducted from the total purchase price of that property.

However, in case you decide to not purchase the property, the developer or owner is not liable to pay the option fee back to you.

  1. Agreement with purchase confirmation

This type of rent to own agreement includes a confirmation of buying the property from your side.

From the beginning, both the parties decide a purchase price or choose to determine the property price according to future appraisal. The buyer and seller also agree to keep a fixed closing date on property acquisition.

As a buyer, it is important to study the market before deciding the property price in this agreement. If the market is rising, it is smart for you to opt for a pre-defined, fixed property price.

This way, you start making equity before buying due to the increasing value of a property in the market. However, if you suspect a decreasing value of a property in future, choosing future appraisal becomes a wise move.

Dubai Mortgages

Advantages of utilizing rent to own schemes in Dubai

Both a buyer and a seller can acquire benefits using a rent to own schemes in Dubai.

  1. A simple way of paying the down payment

The most visible advantage of rent to own schemes is your ability to manage down payment in a controllable manner. You don’t have to put stress in your mind to save a big amount of cash up front.

The scheme itself serves as a plan to save down payment as your property rent for a few initial years. However, you still need to save an optimal amount of money to ensure the ease of paying other charges and fees related to property acquisition.

  1. Enough time to work on your credit score

Many people don’t get mortgage loan approval due to a bad credit score. In that case, you have to work continuously on your credit score before applying for a loan once again for home acquisition. But all this time, the price of the property keeps on rising.

With rent to own schemes, you can lock a property with a fixed price and keep paying rent for a few years. This rent serves as your down payment, while you get enough time to improve your credit score. So, when the lock-in period ends, you can easily utilize a mortgage to pay off the rest of the property price.

Also Read : Best Mortgage Rates UAE 2019

  1. Ability to make profitable property investments

The Dubai property market is showcasing a moderate rate of growth right now. However, the experts predict a great market rise after the 2020 Dubai Expo.

This makes rent to own schemes a golden chance for property buyers to utilize a lock-in agreement to buy a home. You can utilize a fixed price agreement, which will keep the price of the property same when you are ready to buy in a few years.

  1. Freedom of planning home maintenance

When you know that you are going to buy a rented house one day, maintenance steps become easier. You don’t worry about wasting your money.

You can take enough time and plan home maintenance, extensions, and repairs. This makes you comfortable in a house even before you buy it formally.

Factors you can’t afford to miss before signing a rent to own contract

  1. House value

Utilize a trusted source to find out the right value of a house. This value should justify the amount given in the property agreement. You don’t want to agree to a price that is higher than the actual value of the property.

  1. Lock-in period

Evaluate the lock-in period included in your contract, which is the years of paying rent to save as the down payment.

  1. Down payment

Evaluate the total amount of your rent that will work as your down payment according to the contract. In some cases, only a small percentage of your rent works as the down payment. Hence, this evaluation is critically important before signing a contract.

  1. Refundable rent vs. non-refundable rent

In some contracts, sellers agree to refund some amount of down payment, in case you decide not to purchase the house. You need to study the contract properly to find out whether you are eligible for refundable down payment or not.

  1. Terms of exiting a contract

Every rent to own agreement includes special terms of exit. You should carefully read the conditions and terms to understand the situations and their consequences if you decide to exit a contract.

  1. Hidden charges

There can be a few hidden charges or additional costs associated with a home acquisition. You need to find out about them and include them in your personal list of charges. This way, you can save enough money to cover those charges without any complications.

  1. Potential job loss

Job loss can be a big hurdle in your way to completing a rent to own contract to acquire your house. You should discuss potential job loss and find out ways to recover in those scenarios.

  1. Rejection of mortgage

Mortgage rejection is another critical issue that can arise in future. You should plan ahead and cover the tracks in advance for the situation when you don’t attain mortgage approval at the moment of purchase.

With the rent to own schemes Dubai, you hold a chance to acquire your dream home without losing valuable time or putting too much pressure on your financial condition. Hopefully, this article has prepared you to leverage rent to own schemes in dubai systematically.

To Know more about Mortgage Loan Process, Read our updated blog ” Complete Guide on Mortgage in Dubai“.

9 things to do before applying for a mortgage in UAE

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If you want to buy a property in Dubai, there are two ways to go about it.

The first option is that you pay for the home with cash and the second one is you take out a mortgage. The latter provides you with more flexibility with regard to managing your finances. 

If you have thought about taking a mortgage in Dubai, first you have to know how it works and its process. And this article will tell you everything you need to know before you take out a mortgage in Dubai. 

9 Tips That Will Help You Secure The Best Mortgage Deals 

Home financing is a fiercely competitive market for banks in Dubai. And all licensed banks here provide some or other form of a mortgage.

One of the critical aspects that banks use to determine which applicants are eligible for which loan product is the credit history. There is an AI Etihad Credit Bureau, which monitors every client associated with the bank. Here are some behaviors that will make you more attractive to the banks and ensure you get a better deal on your mortgage.

  1. Understand The UAE Market 

Understanding how the UAE real estate market works will give you a head start. The market in UAE is very different from other countries. Therefore make sure that you hire a reliable real estate agent who can guide you through the process. They can help you work through the paperwork, fees, rules, and regulations, etc. 

2. Do Not Store Unnecessary Credit Cards

When evaluating your credit report, the bureau considers both the credit limit assigned to you and its utilization. Therefore, if you have five credit cards but use only two of them, then the ones you are not using affect your credit report.

If you are plan to get a home loan, return the credit cards you are not using. 

Alternatively, you can ask the banks that issue the cards to reduce the credit limit on them. For instance, if there is a card that you only use when dining out, then reduce the limit to the amount that you need to eat out every month. 

3. Understand The Mortgage

In the case of an off-plan, developers provide payment plans in which 100% of the purchase value is either paid before handover or a percentage is paid at that time. And the balance amount is paid after the completion of the project. 

In the case of pre-handover payment plans, the availability of mortgages will be based on the form of the payment plan. If the payments become due when under construction, the bank will offer a maximum of 50%, and you will have to pay the rest of the amount. 

But these forms of payment plans are rare as developers provide payment plans where most of the purchase price is due during the hand-over.

Additionally, for ready properties, the lenders consider offering mortgages based on the UAE lending caps. 

4. Compare Rates 

There are many interesting options out there; therefore, it is important that you shop around before making a final decision. There are dedicated sites that compare the plans of different lenders so that you can evaluate and make the best decision. Comparing options will ensure that you have assessed most of the options in the market to choose the best one for you. 

5. Try Not To Switch Too Many Jobs 

Banks do not prefer customers who change their jobs between six months and one year. They look for stable employees with reliable cash flows coming every month in their bank account. But that does not mean you should not take up a better package or your dream job; just avoid switching jobs too often. 

6. Do Not Take New Loans 

If you are serious about buying a home, then avoid taking any other kind of loan a year before buying the house. This is not the time to buy a car that you cannot afford; this will quickly make you appear unattractive to the banks. Similar is the case with personal loans; try to limit your personal and expensive spending during the time you are trying to take a home loan.

7. Show Sufficient Savings 

If you have a working spouse, then transfer your savings to one bank account. And, you can show this bank account on your mortgage application. It will assure the bank that you have enough savings to repay the loan timely. 

8. Smartly Use Your Savings 

If you are saving money every month, look for a way to secure it in some kind of deposit scheme by the banks. You can do that for one month that is updated every month. This will indicate to the banks that you are responsible and prudent. 

9. Understand The Mortgage Application 

Make sure that you only go for offers that provide everything in writing. It is a sign that the lender is genuine. Additionally, do not sign any documents without reading and understanding their content properly. The knowledge of a real estate agent or legal professional can be valuable here. It will help you to avoid any mistakes that might cost you big. So paying for professional help can be worth spending money on. 

 

What Are The Types Of Mortgage You Take In The UAE?

Following are the mortgage options available for you in the UAE:

  1. Fixed-Rate Mortgage 

In this type of mortgage, the interest rate is fixed prior to the loan tenure starts. Additionally, during the predetermined duration, which is generally five years, the rate does not alter. There are evident benefits with a fixed-rate mortgage as it is easier on the budget and helps you better play your financials.

If there are changes in the market situation and the interest rate goes down, you will be paying the pre-fixed rate. Similarly, if the rates go higher, you will have the advantage of paying a lower rate. 

2. Variable Interest Rates 

As the name suggests, in variable interest rate mortgages, the rate changes throughout the tenure of the loan based on the market conditions. If the market rate goes down, you may end up with a profitable deal. But if the market rate increases, you will be paying a higher rate for your mortgage. This type of loan is ideal for people who possess financial liquidity to handle altering repayments. 

3. Capped Mortgage 

You can also take a capped mortgage in Dubai, where you have some advantages. While you will continue to make repayment at variable rates, the maximum cap is set prior to the loan term starts. Moreover, generally, the capped period can be for a predetermined, limited time. The rate of interest moves up based on market conditions, but a certain limit is set beyond which the interest rate will not increase. 

4. Discounted Rate Mortgage 

In this form of loan, you will be paying a lower amount as financial assistance is offered on the variable interest rate you are paying. However, the discount is only for a short period, and after that, you will pay interest on a variable basis. 

5. Offset Mortgage 

You can integrate your mortgage account with your savings accounts or the credit card of the same financial institution. An offset mortgage is offered by limited banks in the UAE. You can connect your savings account, credit card account, current account under this form of a mortgage.

So your loan repayment can be taken from any of these linked accounts. And by periodically offsetting the amount, you may end up paying a lower interest rate. 

Who Can Get a Mortgage In Dubai?

Whether you are looking for a townhouse or villa or inclined towards an apartment, you can buy a mortgage in Dubai, considering you meet the eligibility criteria. To apply for a mortgage in Dubai, you have to be:

  • Based between 21 and 65
  • A UAE resident or national
  • Employed with a monthly income of AED 15K or self-employed with AED 25K monthly income

Expats can also get a mortgage in UAE; however, there are certain constraints. According to the UAE Mortgage Cap law, expats have to pay the down payment of 20%, which is 15% for UAE citizens, in addition to associated purchase costs. The down payment requirement for non-UAE residents varies based on the property. 

 

Type Of Purchase Purchase Price Maximum Loan-to-value Ratio Minimum Down Payment
First Property Under AED 5 Million 80% 20%
First Property Over AED 5 Million 70% 30%
Second, Third+ Property Any Price 60% 40%
Off Plan/Under Construction Any Price 50% 50%

 

What Documents Are Needed To Acquire Mortgage In UAE?

Individuals who wish to purchase property in the UAE must apply for one. The document requirement may slightly differ from one back to another, but generally following are the documents needed by the banks to apply for a mortgage in Dubai:

  • A copy of Emirates ID
  • A copy of passport and visa 
  • Proof of residences such as DEWA bill or tenancy contract 
  • A salary certificate for employment proof
  • Bank statements and payslips of last six months 
  • The latest credit card statements

 

How To Acquire A Mortgage In Dubai?

Following are the steps that you need to follow in order to acquire a mortgage to finance your home:

  • Look For A Lender 

In UAE, home mortgages are taken through banks that are registered with the Dubai Land Department (DLD). You can contact the bank directly and enquire about their available mortgage offers.

Another option is to hire a broker and let him or her work for you to provide the best mortgage in the UAE. 

Brokers have strong knowledge and insight into the local market and the best home loans that could be ideal for you. This way, you can focus your time and effort on finding the right home rather than getting caught up in the strenuous mortgage process. 

  • Selecting The Appropriate Mortgage 

As we mentioned above, there are different types of mortgages in the UAE. You must consider different factors when determining the type of home loan that is right for you. Some of these factors include your lifestyle, the loan amount you require, the type of property, the cash deposit you can manage, etc. 

Generally, banks have their mortgage calculators online, through which you can get an estimate of your monthly installment by adding your variables. 

  • Acquiring A Pre-Approval Letter 

The most important step of the whole process is getting the pre-approval letter. It is basically an official document issued by the bank. A pre-approval letter is an evidence that certifies that you are eligible for acquiring a mortgage. The letter highlights the maximum loan amount, providing greater certainty of acquiring the mortgage. Generally, it takes three to five business days for banks to send the pre-approval letter. 

  • Choose Your Home 

After receiving the pre-approval letter and deciding on a budget, you can start looking for your dream home. Pre-approval letters are valid between 60 and 90 days based on the lenders. Therefore, you have sufficient time to look for the property that you wish to buy. 

At times people have already found their property, and then they apply for the loan. But in this case, there are chances that they might not be able to secure the entire amount of the home value.

  • Finalize The Purchase Of The Property 

After selecting the property, you can go to the bank to finalize the mortgage agreement. The bank will appoint a property evaluator to assess the value of your property and then make an offer on it. Once the price is agreed on, you can go ahead with the deposit and decide a date for completing the transaction. On the day of the property transfer, the bank will release the loan amount to the seller. 

UAE offers plenty of opportunities to take a mortgage if you are eligible. There are many banks with interesting rates as well. It is important that you must be well aware of the real estate market to make well-informed decisions. And once your loan is approved, ensure that you pay the EMIs timely; otherwise, you will land yourself in big trouble.