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How to eSign a document: online signature legitimacy for Mortgage in UAE

hey guys welcome to a brand new episode of the Dubai real estate podcast I'm your host Tahir majidya and in today's episode we're going to talk all about mortgages and for that I have a very dear friend Amit nainani who's the director of sales from Lion mortgages a leading mortgage consultant in the UAE where I'm going to be discussing all things about mortgages so if you're looking at taking a mortgage in the UAE buying a property in Dubai on a mortgage or want to know more this episode is definitely going to be great for you but before we go ahead if you're watching this on YouTube please do subscribe to my YouTube channel hit the notification Bell to stay updated your likes and comments are really appreciated if you're listening to this on Spotify please do follow us and if you're listening to this on Apple podcast please do give us a five star rating and review this really helps us getting discovered now let's give the music foreign [Music] [Applause] thank you for having me on board thanks for coming thanks for coming uh Amit if you could just introduce yourself uh I know you very well but if you could introduce yourself as to the audience what exactly you do and just to give you a background I've been in UAE for last 19 years initial 17 years I was working with the banks in UE wow and since last two years I've been working with land mortgage and I managed their sales team right so Amit now there are a lot of questions a lot of people have different questions and you know because in general a lot of people in Dubai buy properties you know they're all a lot of overseas investors where people uh you know want to know a lot about mortgages so first of all uh first question to you is how does the mortgages work in Dubai when they want to buy a property uh you know can they take a mortgage for an offline property ready property how does in general mortgages work entire majority of the people take mortgages on a freehold ready property it could be a leasehold property or a freehold property based across any of the Emirates here okay and they get mortgage on that right their eligibility depends on their income documents what they provide they could be either a resident who's based in UAE or a non-resident who can Avail a mortgage right okay now if you know let's talk about the residence right okay residents what is the percentage of mortgage a resident can get in Dubai and for how long that loan can be residents can get up to 84 percent if the property value is less than 5 million okay if it's above 5 million then it's 73 percent that they can borrow on the first property the consecutive one will be 60 financed by the banks by the Banks yeah okay and for how long does this loan or the loaner is primarily maximum 25 years for a salary till they turn 65 years of age for a self-employed return 70. okay so basically if someone is say 50 years of age and his salary he's going to get a 10-year loan 15 years 15 years he's done 65 until he's done 65. and uh if it is self-employed then 25 years that's the maximum that's the maximum that's the maximum cap yeah okay and what uh you know uh what is the difference between you know when it comes to the eligibility criteria for a salaried or a self-employed how does it work see the calculation parameters are different for a salary they look at the fixed salary that he's drawing from his employer and they look at his liabilities there's something called as a dead burden ratio right that's called DBI which is calculated for every individual when he's approaching a bank for any kind of borrowing okay whether it's a mortgage credit card or a personal loan so for a sell read it depends on his salary for a self-employed they look at the company profits that he's getting and the share that is being passed on to him there could be three Partners what is the share of the applicant on that they derive is eligibility okay but self-employed and salary both are eligible now okay so this is for basically uh you know uh people living in the UAE which are expats who are residents and have you know are drawing a salary or have a business here what about non-residents people because there are a lot of people who buy properties in Dubai who don't live in Dubai that's also available the bank does up to 60 financing for them as well they look at their home country documents so let's assume you're based in UK they would ask for your personal account based in UK your utility bill just to prove you're actually staying in UK and a passport copy and they can do the loan okay and how how long does this loan process take for a non-resident a pre-approval takes time because for a non-resident they take a compliance approval so assume 15-day period is given to take a pre-approval the whole execution of completion could take one and a half months to one month depending on his paperwork okay and it's the same time for the resident resident can be done in three weeks as well because he has an Emirates ID all things can be checked much easily for him that's okay okay so for a non-resident it takes about a month to a month and a half because the bank needs to understand why is it invest testing here what's his overall profile should they open his account or no that's why okay okay okay and this uh you said these mortgages are only available to individuals or also is it for companies there are few Banks who do on the company name as well people form jabsa offshore companies or DVI offshore companies they can buy assets under that company name which are primarily formed for a property management thought process they buy 10 units five years loans are not that easy because not every bank is comfortable doing a loan when the asset is taken under the company name but there are banks who work on it as well so it's case to case basis they can be worked on okay but it's not a normal uh Trend this year it's not a normal practice so most of the times people buy properties on individuals individually yeah because there's no taxation I guess that's one of the reason people are more comfortable buying it individually okay but say if I'm taking a loan on my personal name yeah okay but I want to have a joint uh owner say my brother or sister or wife or you know a family member as a co-owner on that property is that possible immediate blood relationship can be done let's say your wife could be your son if he's about 21 years of age your sister your brother or your parents can be done but if if the say for example uh you know someone's buying a property in their name and wants to put their kids who are below 21 that is not possible you can buy the acid but the financing is difficult okay there are legal repercussions when you you know give a loan where a miner is also an owner of a property that's right okay so that is something which does not happen yeah are we talking about now you know right now due to you know inflation and the interest rates globally are going very high what are the interest rates you're seeing right now in Dubai in general right now the range what people are boring at is around 4.69 percent to around six percent there's a range if a resident is taking a loan yes it's at 4.75 odd person non-resident takes it at five and a half right so there's a difference between a non-resident and Resident rate but people are still borrowing the sales have not dropped you know last one year interest rate has doubled up yes but there is no you could say a negative impact or less Supply in people applying for loans right people are still borrowing because they understand that the appreciation on the property it is still at a higher Pace than the rate the interest rate is increased exactly that's why exactly and still even with the higher rents even if they're buying as an investment the rent can still cover up the bank emis correct right right I mean also uh can people get uh you know can borrow money from the bank based on the property if they are looking at upgrading their properties because what is happening a lot of you know people they have properties and those properties are old you know certain older communities such as Meadows or if you see some old and older Villas in the panjumera does the bank even fund if they want to upgrade the property or you know refurbish the product that's a quite normal practice right now with high-end Villas people who have properties like German Island Golf estate have old properties yes they've taken them they're staying in them they get it upgraded they get a top up on their existing loan okay so the bank releases Equity against a quotation given by them wherein they either get a pool done or landscaping or further cosmetic or additional modifications academically done it can be done is there is there a percentage what the bank will fund it purely depends they will not cross the LTV parameters so let's say if the property price is 10 million okay the loan which the bank will give will not cross 7 million so if his existing loan was five they could give him two million for the upgrades okay okay okay and what about uh mortgage and financing for people who want to buy land and build their own Villa they do that financing as well so bank will fund the land and construction costs both or only the land both of that they do for the purchase of land as well right and for the construction cost only thing is this product is majorly given for residents because they want people who are based here right because they can monitor that okay someone who's in non-redison it becomes difficult for them to track and follow up the construction model so if it's a resident who's living in the UAE can easily get more restriction to buy land and construction as well and what is the percentage on that is the same 80 percent or while buying the plot they finance 50 okay when they are doing construction depending on the cost of construction Bank does 100 as well okay so there is a possibility the bank can give 100 as well correct right right okay now I mean a lot of people are buying properties taking golden visas okay or becoming new residents and they want to take new mortgage you know mortgage for another properties how does that process work I mean if it's if if a new Resident someone who becomes a resident uh you know say today right does the bank give uh you know a loan immediately or does the bank wait for some time what is the criteria it all depends on the client profile if someone is high net worth back home as well right where is he having a successful running business in his home country they can still look at it so it's on case to case basis okay generally when they give a loan to people they need to have a continuity in their income in the country right so at least six months in the country where he has an income we can try to get him the loan okay so if he's a new Resident he needs to have some income over here at least for the ball to start rolling where you can repay the law but what if someone comes in and establishes a new business and becomes a resident in that case what happens we can still take his income back home and try to structure it with the bank it all depends on his profile you know okay if he's a high net worth individual I'm sure he would have multiple sources of income back home as well no but for someone let's assume that someone's a startup does a new business or it's you know has started uh you know was on a job before moved over here started a new business in that case is there a timeline at least six months okay because there has to be some certain recurring business that he's doing in his business to say that he can repay the loan right because the bank's objective is that if they lend money yeah the client should be able to pay on time right yeah that's it is just the backdrop that they are lending more comfortably to him right but okay and do you know like for example in the UK in the US there's you know this uh Trend where people take uh you know two mortgages on one profit like a second charge does that also happen in Dubai at the moment it doesn't happen it's the first degree mortgage that's counted okay there are people who are doing corporate lending let's say for a factory or a warehouse in those cases there are two three Banks who have contributed and given him a limit to construct that warehouse or a factory those cases they can have one degree mortgage and a second degree mortgage but not in a normal residential cases that doesn't happen yeah and how does how does uh one go about that if a person already has a property right and if he wants to buy another property and take a mortgage right uh can he take a mortgage on his uh existing property if it's a fully paid up property he could get a mortgage against that use the Top-Up amount or the amount from the loan proceeds and buy an Off plan already what is the percentage would a bank give say if a property is worth say five million Dirhams right and it's a fully paid ready property uh what percentage does that matter the same parameters they could give him up to 80 depending on his eligibility okay okay if he's eligible uh as per his financials the bank will give him uh this maximum loan to Max is possible okay okay but do do mortgages also work for offline properties at the moment it is still under discussion all banks are still reviewing because they need to understand when they see the Handover notice they are more comfortable right because that's when the developer needs the payment if you are a buyer till the time your developer is not telling you do me the final payment yes why would you need a mortgage as well no but some you know because some people come and say that you know why can't we get a you know uh mortgage on an offline property because in some other countries this does happen right where Banks do get involved at a much earlier stage but does that even work over here it happens you could say for the major developers on a case-to-case basis okay but it's not a very common it's not a very common thing because those ticket sizes are very small so if you look at A bank's perspective they would make more money if they do a 2 million loan or a one million loan versus a 200 000 trans payment done for Off plan okay so but a Handover payment can be easily funded uh when the hand but in this case if someone buys an offline property say he has a payment plan of say 70 30 yes paid 70 and now 30 is due for on Handover correct if he was to buy a ready property probably in the same building then he would only put 20 down payment correct but in this case if someone has bought off plan is it possible that once the property is ready he can take the money out yes once initially the bank will give him 30 percent get him the Handover of the unit a title lead is issued under yes mortgage with the bank post that he can take a top up on that mortgage it's possible so he can get the balance Equity out and use it over there LTV parameters that is approved for okay that's possible that is possible yeah okay that's it what what do you see uh you know uh because you must be working with a lot of clients who come for mortgages yeah uh what is the main reason for people's mortgage to get uh rejected apart the eligibility criteria like what do you see like mistakes which people make where you know if they didn't do that financially or you know uh kept certain things in certain ways I'll tell you majorly people make a mistake in managing their are finances with respect to the aecb report okay ACB report is credit report that's quite critical in this part of the world because that evaluates how you've been paying people on time okay are you paying your utility bills on time are you paying your existing credit card bills on time your existing auto loan personal loan mortgage installments on time because that shows your habit or your Trend that you've been a good paymaster got it so if you pay well people on time then the banks are comfortable right if there are people who have ignored their utility bills let's say that creates a wrong impression because the bank feels if he didn't honor a small payment of let's say 200 on his utility bill why would he honor us on time for our monthly installments okay so even your utility bills if you don't pay on time actually affects taking a mortgage a small bill of 100 shows that you are lazy or lethargic in paying to the provider right so this is something which a lot of people don't know about they they take it lightly at times they just give an excuse that sorry I was traveling but you have a facility yes Plus Check returns this is the second thing which could impact people right at times they are careless when they don't have funds in their account and they have given a check to the landlord or to any other suppliers or people like that that return impacts them because shows that they are not serious where they have given an instrument of honoring the payment on time okay that also impacts the score and talking about credit scores what is is there a minimum credit score you require to go in for a mortgage every bank has a different Outlook because there's no standard uh It's A bank's call where how do you put it across to them on the justification that this individual was actually held up for a certain reason that he didn't pay the mortgage okay okay yeah okay now Amit tell me something when someone wants to come and take a mortgage right now you obviously I know a lot of my clients we you know always refer to you yeah and they've been really happy with your service but uh for people uh you know watching this or listening this how does your uh you know as a as a mortgage advisor how how does the whole process work what are the fees involved costs involved in taking a mortgage see generally a mortgage there are basic fees involved which is called a processing fee which the bank charges there is a valuation fees with the bank charges and at the end of the transaction there is mortgage registration life insurance and property insurance which are charged to the client so whenever we meet a new client we share with them multiple proposals of the top three four banks for them to analyze that these are the three four options available for them and then we suggest which suits their requirement because every client would be in a different income profile or an industry where he would be suitable with a certain bank or a bank proposition so our core job is to advise them on the right Bank get the pre-approval done post they finalize the property get a final offer letter till the day the transfer is completed we are there with them just to provide end-to-end assistance okay but why why does the bank I mean I understand the processing fees and valuation fees why is there a life insurance attached to a mortgage the core reason being that today if I take a mortgage under my name yes God forbidden anything happens to me yes the life insurance company would settle the mortgage with the bank okay and my legal hires could be my family or my nominees get the access to the property so basically that's to cover the banks the bank's risk and right after me maybe my family is not able to repayment yes that's why okay so basically in that case the bank is covered and the property becomes debt free for the family and this life insurance is very normal it's like a term insurance whenever you settle the mortgage sell the property it gets canceled okay talking about mortgage settlements right if people want to prepay pre uh you know pay early what is the general Trend or Norm or the law that if they want to make a prepayment uh what does the bank charge every bank has a different slab available there is a bank which offers 15 each year outstanding without penalty another bank does 20 another bank does 25. so it's as per every bank's proposition of making revenue on the balance payment that they're getting back okay plus the whole idea is people take a loan for 25 years and they themselves Target that they want to run the loan in 10 years and finish it off okay because no one wants to drag a liability at a later stage of their life true so that's how people plan it no but then what is the maximum penalty if say someone takes a loan and wants to go and foreclose maybe after one year two years whatever it's one percent or ten thousand whichever is lower and that's a law that's a standard for every Bank all the banks okay so one percent or ten thousand whichever is lower lower okay idea is they want to you know keep people taking loans and settling because then people will hesitate to sell the house if this penalty is on a higher side people who have bought even if they're making a profit on the house they don't want to sell it because of the penalty okay so that's why it's kept on a lower side I mean talking uh you know there's also something which a lot of people do uh in you know across the world is if they have a property portfolio which is already rented okay and they're getting rent out of it so they discount the lease you know the lease rental discounting does that also happen in the UAE how does it work that happens but that majorly happens for people who have multiple properties let's say more than 10 units okay or people have complete buildings that's okay so say if an investor has a full building and the whole building is rented correct right uh the he can go and discount the rent the bank would look at his rental income okay deduct the maintenance fees that he's paying annually for that building and then get him alone either they could give him cash in his account of those proceeds can be used to buy another property property okay okay and is there a restriction on how how you know that uh how many properties you can buy on mortgages as far as you qualify your your eligible you have an income to support the repayment Banks don't have a country Banks don't have a concern on that yeah okay only the thing is the first property you get more and the second is that's it lesser okay is does this also apply to a non-resident um but the first property more Mortgage in 60 which is the max 10 houses 60 60 is the maximum is eligibility okay yeah okay okay and the how how does the whole process work say if someone had a mortgage has already paid off the mortgage okay okay and now he wants to you know get the charge out is it simple is it complicated to the trustee office get a release letter from the bank on basis of the release data they will issue they will charge him 1650 as a mortgage release fees issue a new titled it and hand it over time so it happens instantly and on the spot I could take maximum one hours time it's a very simple process yes done right okay and does the are you seeing a lot of loan buyouts happening at the moment because there are people who were on a variable rate right which is gone up to let's say six percent or seven percent versus people who want to move to a fixed rate of five percent where they want to cap their installments because the income is not increased right you know I would have borrowed three years back my income was X right now also my income is X but I can't pay a higher premium just because interest rates have increased so I would pay a small fee of Shifting the loan yes and then get it moved to a fixed rate for the next three years okay now talking about interest rates what is what is good like because you see there's fixed rates variable rates from from from an end user point of view uh whether he's buying one property to stay or to rent it out what is financially beneficial for someone like preferably it would be a fixed rate okay because then you know that next three years or two years or five years your installment doesn't fluctuate and you can plan things right in a variable rate there is a fluctuation happening every three months or every one month and right so client is more open to fluctuation that's the only risk but you know as we have 100 kinds of people everyone has a different thought process true few people project that ibar would come down in six months so they want to go for a variable product so it's an individual Choice okay we show both the options to the client and whenever he fits the bill we give it to him so when you say a variable rate how does a variable rate work means how does the bank calculate the variable rate the bank is offering a fixed margin let's say there is a bank who's offering a fixed margin of 0.99 as of today yes plus a three months e-bar okay so which means that every three months the installment as per the fluctuation in the three months e-bar will change okay for the client so let's say in the first three months is installment is six thousand if the eyeball increases the next three months Emi could become seven thousand okay if the eyeball goes down it could be five and a half as well okay so that's a chance which the client takes on his thought process okay so that's the thing but usually a fixed it's better to know that what is going you're outgoing because then it can just change drastically and where do you see the interest rates going like right now everybody's been like you know interest rates have gone up so high I think it will stay at the same range for the next six to eight hours maybe 12 months down the line then they will start on a lower side okay start coming so anybody taking a mortgage right now definitely a fixed rate is definitely the best thing that's the best advisable option okay okay I mean let me know when people want to take a mortgage right especially when they come in the market uh you know Banks uh always they don't give the loan instantly they do a pre-approval right how does the pre-approval process work and how much time does it take and uh what does the does the client have to spend money for getting a pre-approval or what is it in the current scenario most of the banks are doing pre-approval without any cost and the benefit is as a end user I get a letter from the bank confirming my eligibility true so then I can go and Shop ingly yes and plus I can finance and manage my budget so if I let's say I get a pre-approval for 2 million I know that I could buy a property of 2.5 where that 2 million loan will be given half a million would be my down payment exactly plus it helps me in negotiating because absolutely go for a viewing yes if there's a pre-approval in hand it makes it much easier to show the seller because then he understands that I will not be negotiating and not turning back and give the final offer the person that see this got it okay but how much time does this pre-approval last like say if someone gets a pre-approval today is there a timeline or is that that pre-approved calendar days as of today okay so for two months that pre-approval is valid before that a person needs to finalize on a property correct even if it expires we can revalidate it again okay but not like you know uh he doesn't need to uh like close the transaction in two months but he can he has two months to actually go out and shop and look for a property correct right and this same applies for a non-resident as well yes two months okay okay and once he signs and once say a person signs enable you and does everything uh typically how much time does a person need to factor into get a final loan from them generally when you're buying if the seller doesn't have a loan the normal timeline is a month's time for a resident client yeah in case if the seller has a loan then you have to add more 15 days because initially your bank will settle the seller's loan okay so people generally tend to keep an mou for 60 days and Target to end the transaction in 45 days and that is also probably one of the most complex uh ways when there are two Banks involved because but it's more regulated here so Banks keep on engaging themselves they don't trouble the buyer or something okay but they need to factor in 15 20 days more than a normal case because you need to give time to that bank to retrieve the old title lead or issue the clearance documents yeah okay and what are the fees a person needs to keep in mind to register a mortgage there's a mortgage registration fee which is 0.25 of your loan amount so whatever is the amount you're borrowing from the bank dld charges a mortgage registration on that amount of point two five percent one to five percent okay so if it's a more if it's a loan of one million then 2500 plus there is a trustee fee which charges when you're executing yes and they charge and normal fees which any which way is a person would pay correct okay okay I mean I think this was really great that was a lot of information from you thanks a lot for coming and joining us on this episode uh if people want to get in touch with you with more questions regarding mortgages where can they uh contact you you can reach out to me at land mortgage or I can give my email address which is amit.nani at linemortgage.a okay so I'm gonna put that in the description below so thank you so much for joining us and that was really great to having you on the show thank you so much [Music] thank you