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UAE banks will be forced to remove the two most important limits on housing loans

24.11.2019
Getting a mortgage to buy a property in Dubai will now get easier. Read more to find why and for whom.

The UAE central bank issued a circular for banks concerning two major changes in the mortgage regulation policies in order to expand potential customers’ access to home loans in Dubai. However, most banks have yet to implement a key change.

Back in October, the UAE central bank issued a special circular requiring banks to lift the maximum age limit at the time of the last loan repayment. This was the first of two major legislative changes.

Later, central bank issued a circular demanding the cancellation of a 3 per cent commission for early mortgage loans repayment. This was the second important innovation, which almost all banks introduced soon enough. But very few banks, if any, made changes to their credit policy to take into account the first point, that is, the abolition of the maximum age limit by the time of the last mortgage payment.

Prior to the circular issued by the central bank, the maximum age limit for borrowers was 65 years if the borrower worked for the company, or 70 years if the client was self-employed.

The circular lifted the age limit, stating that "the maximum age by the time of the last payment on a home loan should be determined by mortgage lenders in accordance with their risk management and lending policies."

But most banks to this day prefer to maintain the previous upper age limit and consider older borrowers only on an individual basis.

“This is another positive step made by the central bank of the UAE. We just hope that more banks will take this responsibility and decide to remove age cap in order to expand the market and make lending more affordable for age-related customers,” said Warren Philliskirk, director of Mortgage Finder.

Data from the leading UAE bank show that 44 per cent of its borrowers fall into the age category of 30-40 years, 27 per cent forms the group of 40-50 years old, and 18 per cent get into the 50+ age group.

Removing the maximum age limit will have a positive impact for the real estate sector. This will lead to a slight increase in the number of buyers. But even a five percent increase in market demand is already a good thing, experts say.

In Dubai, according to experts, there are enough of potential real estate mortgage buyers aged from 55 to 60 years. But many don’t want to invest, as they are required to fully repay the mortgage by the age of 65, and in this case the monthly payments will be too high, which they cannot afford, if they want to save some extra dirhams.

Currently, the maximum mortgage loan term in the UAE is 25 years, and an increase of only five years would be significant.

Philliskirk from Mortgage Finder said: “This will lead to lower monthly payments, as financing will be repaid over a longer period, which will also help some potential buyers to get access to the market, making mortgages more affordable.”

To always stay up to date with the latest analytics data and real estate prices in Dubai, subscribe to our newsletter using the form below. And in order to sell, lease or buy/ rent housing or commercial properties in Dubai, contact IMEX Real Estate. Our contacts:

Tel. in Dubai, UAE: +971 (50) 2528188 (Whatsapp, Viber, Telegram)

Toll Free Dubai: 800-IMEX (800-4639)

IMEX REAL ESTATE BROKER LLC, UAE

Office 2502, Marina Plaza, Dubai Marina, Dubai, UAE

Email: pm@IMEXre.com

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