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Q: I have finally decided to take the plunge and invest in property in Abu Dhabi. However, I have heard that it can be difficult to get the right mortgage. How do I start the process and how do I choose the right mortgage?
A: Taking out a mortgage can be one of the most important financial decisions you can make and - with the market in the UAE expanding all the time - the range and variety of choices can be very confusing.
An important first step is to consider working with a reputable broker or finance company with the right experience to guide you through the process and make sure your application is processed effectively. If you are a first-time buyer, the range of options - and the complexity of the process - can be daunting, and professional advice can be invaluable in ensuring you secure the most competitive rates and the right type of mortgage for you.
There are a number of different types of mortgages available in the UAE, and understanding the different options will make your choice of mortgage easier. You also need a clear understanding of your own financial plans and long-term needs.
For example, a key question to answer is the length of time you want to pay the mortgage. The repayment schedule will determine the overall cost, and will also impact when you can capitalise on your investment if you are already planning to sell the property at a later stage.
Look at your finances to determine whether you will need flexibility in your payment schedule and so whether a fixed, capped or variable mortgage will best suit you.
Tailor-made
If your occupation provides irregular payments and your income changes from month to month, you might want to ensure that so-called "payment holidays" are built into the mortgage. You should also consider whether a credit facility within the mortgage would suit your financial situation.
There is also the issue of portability. If you are planning to start a family in the next five years, you might want to ensure that you can take your mortgage with you when to move to a larger home.
As well as your own fin-ancial situation, the property you are investing in will play a role in determining which provider will offer you a mortgage. Major developers in the UAE all tend to have strategic relationships with partnership banks, but some private developers may not have this facility. Always have a professional third party examine any mortgage proposal that is facilitated by the developer, to ensure it supports your best interests.
When you've decided on a provider, meet with the in-house mortgage adviser to ensure that you feel comfortable with their competency and understanding of your personal situation. Clear communication is essential between all parties during the sale of a property, and you need to feel secure that your mortgage provider has the capacity and capability to stay on top of the transaction.
Finally, it's worth remembering that, as well as you choosing a mortgage pro-vider, a mortgage provider must also choose to provide capital to you.
Increasingly, banks and finance houses are examining an individual's financial history, income and future prospects as part of their criteria for offering mortgages. The support of a professional financial adviser can help you present the clearest and most compelling overview of your position to ensure that you are eligible for the right mortgage for you.
- The writer is director of general insurance at Nexus, a leading regional financial adviser.
The opinions expressed above are the writer's and don't necessarily represent the views of Gulf News. Please send your questions to: advice@gulfnews.com.
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