“… We pride ourselves on delivering high value legal services. Excellence is our Minimum Standard.”
The United Arab Emirates (UAE) has announced new restrictions on mortgage lending in an attempt to avoid market instability. The new rules cap allowable mortgages at 65% of the purchase value for foreigners and 70% for residents and restrict loan periods to 25 years. It also sets limits on how old a borrower may be at the point of the loan?s last repayment; 65 for foreigners and 70 for residents. The rules also stipulate that a monthly repayment amount should not exceed 50% of a borrower?s income and that the total loan amount should not exceed seven years of a foreigner?s total income, or eight years of a resident?s total income. For more on this continue reading the following article from Global Property Guide.
The UAE Central Bank is limiting mortgage lending to prevent a repeat of the 2008 property market collapse.
The rules impose new mortgage restrictions on the 23 national banks and 28 foreign banking units in the country:
For homes worth more than Dh5 million (US$1.36 million), loans for first-time buyer expatriates should not exceed 65% of the property?s value, while loans for Emiratis will be capped at 70%.
For second and subsequent property purchases, loans for expatriates should not exceed 60% of a property?s value regardless of cost, while loans for Emiratis will be limited to 65%.
For off-plan property, the maximum loanable amount is 50% of the property?s value regardless of purpose, value or nationality.
The maximum mortgage period shall be 25 years and the maximum age at the time of the last repayment is 65 for expatriates and 70 for Emiratis.
The total monthly repayments should not exceed 50% of a customer?s monthly income regardless of nationality.
The total loanable amount should not exceed seven years? annual income in the case of an expatriate and eight years? annual income for an Emirati.