Abu Dhabi, UAEMonday 27 May 2019

Homefront: 'What deposit do I need to secure a mortgage in the UAE?'

Property expert Mario Volpi outlines the different options for expatriates and Emiratis

Jumeirah Village Circle in Dubai. An expatriate needs a 25 per cent deposit for a house worth less than Dh5m in the UAE while an Emirati needs a 20 per cent deposit. Jeffrey E Biteng / The National
Jumeirah Village Circle in Dubai. An expatriate needs a 25 per cent deposit for a house worth less than Dh5m in the UAE while an Emirati needs a 20 per cent deposit. Jeffrey E Biteng / The National

I really want to buy a place but cannot do so without a mortgage. What percentage do I need to have in cash to be able to secure a good home loan? SM, Dubai

At the end of 2013, the UAE Central bank changed its lending criteria which meant an expatriate could secure 75 per cent of a home's value in mortgage finance for a ready property up to the value of Dh5 million; for Emiratis the limit was pegged at 80 per cent. If the property is worth more than Dh5m, the loan cap for expatriates is 65 per cent and 70 per cent for Nationals. For second and subsequent property purchases, expatriates will be eligible for loans up to 60 per cent of the property value and Emiratis allowed to take 65 per cent regardless of the value of the property.

A mortgage can be for a maximum of 25 years and the age limit is 65 for expats and 70 for Emiratis. For an off plan property purchase, the loan is capped at 50 per cent regardless of purpose, value or nationality.

So, your first mortgage of less than Dh5m requires a deposit of 25 per cent of the value of the property. There are many options available in today’s market so shop around to get the best rate. If you are in a hurry, use a dedicated mortgage broker who will check out the best deals from all the banks before presenting the findings.

Remember that the interest rate charged is not the only consideration, you should look at having other questions answered such as what the charges are for early settlement or can you overpay the monthly repayments (if possible) to reduce your time? The broker can also advise on what type of mortgage is on offer such as a fixed or variable rate. Most banks offer a very quick initial pre-approval and some throw in sweeteners such as free valuations or free insurance and/or arrangement fees to entice you.

I've given notice on my villa in Abu Dhabi after five years. During that time we've had little to no problem with the agency we let through. They've sometimes been a little slow in maintenance, but any emergency was dealt with promptly and everything else did get fixed eventually. We've agreed to repaint the villa before we leave and agreed a date and time to hand the villa over. However, the agency is telling us they will take the keys and Abu Dhabi Distribution Company clearance certificate copy at the time of handover, but we need to contact the maintenance department to get the deposit back afterwards. I'm not keen on this given how slowly anything relating to money can sometimes be. I've told the agency the deposit must be returned to me at the time of villa handover, or I will not hand the keys back. Where do we stand with regards to the law? We're happy for the agency inspect the villa prior to handover, but this hasn't changed their stance. BM, Abu Dhabi

Your question poses an interesting situation and one you quite rightly say could affect many other tenants. The straight answer is that nothing is stipulated in law (as such) about when a deposit has to be returned other than it ought to be returned in a timely manner, assuming all vacating formalities by the tenant have been met.

What you are asking for is not unreasonable and with a strong argument highlighting your point, you ought to reach a satisfactory conclusion.

It ought to be easier to get a deposit returned quicker if the tenant is dealing with the landlord directly but in your case the agency is probably managing the property on behalf of the owner so I guess there are certain administrative procedures post handover inspection that they may need to fulfill before handing back the money. I realise this is frustrating because no doubt you will have complied with all that is necessary to get your deposit back, however patience is needed.

My advice would be to remain calm and agree a strict time frame for the deposit to be returned even if it is after the handover inspection. I don't recommend holding onto the keys or postponing the handover as this would just cause you issues further down the line and this delay could also potentially cost you financially.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 34 years in London and Dubai.

The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com

Updated: February 6, 2019 02:12 PM

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