Abu Dhabi, UAEWednesday 21 August 2019

'Do I have to pay a higher mortgage settlement fee than agreed upon?'

The Dubai resident says he wasn't aware the UAE Central Bank removed the Dh10,000 cap last year

 The Central Bank sent out a circular last summer stating that the mortgage settlement cap is now 3 per cent. Getty Images
 The Central Bank sent out a circular last summer stating that the mortgage settlement cap is now 3 per cent. Getty Images

I took out a mortgage with a bank in the UAE in May 2017 and had no issues until recently. The loan agreement that I signed with the bank in 2017 had a clause regarding early redemption that said: “A fee of 1 per cent calculated on the amount being prepaid or Dh10,000 whichever is lower shall be imposed for any prepayments/redemptions within five years from date of first disbursement. After five years, the bank will not levy any early settlement fees.”

I was under the impression that this clause stating whichever is lower between the 1 per cent or Dh10,000 caps the repayment settlement fee to Dh10,000. I raised this and the bank replied that “the settlement fee is 1 per cent + VAT and the cap of Dh10,000 was removed in July 2018. The revised cap as per Central Bank guidelines is now 3 per cent”. They also said that “a formal communication of this change was sent to all our clients last year on your bank registered mobile number”. I did receive a text message and a link but I hadn’t read it. I don’t feel I was properly informed and I have not agreed to any other conditions. These new terms have been applied without my agreement. I have been charged a total of Dh17,915 instead of Dh10,000.

I feel wronged here. I would like to know if this is something I should forget about as nothing can be done or if I can seek help in reclaiming the extra amount. TA, Dubai

It is correct that the UAE Central Bank changed the guidelines for mortgage repayments. A circular was issued on June 18 last year, the ‘Amendment to Annexure 2 of the Regulations Regarding Bank Loans & Services Offered to Individual Customers (2011)’. In respect of home loans this stated that the penalty for full or partial repayment of home loans could be a maximum of 3 per cent of the amount outstanding. I would expect that the loan agreement included a clause that stated that charges would be in line with legal limits so the bank is permitted to amend the penalty terms in this regard.

TA received a text message with a link to amended terms, a copy of which has been sent to me and clearly sets out the revised charges. The Central Bank circular states that it has “also instructed banks and finance companies to display the new fee caps on their websites”. We have no reason to believe this wasn’t done.

As TA received notification by text message, the information was on the bank’s website, and also published across all the local press, it must be assumed that he was able to access this information. Any claim that he wasn’t properly informed is not going to be accepted and in this instance the bank has not made any errors.

I have applied for a job in Abu Dhabi and the company has offered me a place with the condition that I pass the government security check. They informed me that my security check has not been positive, but they didn’t provide any further information. I have visited the UAE three times without problems and I have not been in the army or associated with any extremist groups. The rejection has been a shock for me and I am sure there has been a mistake or a misunderstanding. How can I get this changed so I can take up a job? Can a new employer reapply for a security check if the last application was less than six months ago? SK, India

It is not unusual for people from certain countries, or for those applying for specific roles, to have to undergo a UAE government security check, especially if they are applying to a government or semi-government company. The company is not obliged to provide details and it is likely that they don’t have any as only the Ministry of Interior can tell someone why a visa application has been rejected and even then, they are not obliged to so do, either to an individual or their potential sponsor.

If a visa is rejected and the individual believes that there is no reason why it should be, such as in this case, there is nothing stopping an employer from reapplying although a different result is not guaranteed. Note however, that if the reason for rejection is stated as ‘security reasons’ no further application will be considered.

If SK knows of no reason why the application has been rejected, or believes it is a mistake as there are other people with the same name, he can try to explain this to the employer and they need to raise this with the Ministry of Interior at the time of any further application and ask them to cross reference passport numbers and date of birth. Other common reasons for visa rejection include incorrectly entered details or a criminal case in a home country where the countries liaise. A further application does not have to be delayed if dealt with correctly.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at keren@holbornassets.com. Follow her on Twitter at @FinancialUAE

The advice provided in our columns does not constitute legal advice and is provided for information only.

Updated: July 20, 2019 10:48 AM

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