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Frequently Asked Questions - Mortgages

Frequently Asked Questions - Mortgages

What is the difference between a mortgage loan and a personal loan?

A mortgage loan is a debt registered against a property which can be possessed by the lender in the event of default. Whereas personal loan is given to a client based upon their financial circumstances. Mortgages are usually up to 25 years, personal loans generally are granted for less than 5 years.                                                                                                                           

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When a lender grants a mortgage to someone what do you think is their greatest priority?

Ability to repay the monthly repayments is generally the lender’s greatest priority, the valuation of the property is also of high importance.

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Why do you think life assurance is important when taking our a mortgage?

In the event of the death of the borrower the liability would fall to your next of kin (wife) so life assurance mitigates this. Most banks insist on it and will arrange for you, whereas  others let you arrange it yourself, or you can use an existing policy. Friends Provident and Zurich are two companies who can provide this type to protection insurance. Hamptons can help advise on these matters.

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What documents do you think Lenders need to see before granting a mortgage?

·   Passport

·   Bank Statements

·   Payslips

·   MoU (Memorandum of Understanding)

·   PSA – Purchase Sale Agreement

·   References – From your company and your bank.

·   Property Details

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Why do you think an independent valuation is required by the banks?

To ensure the property is in good repair and stands up to the value on the application. The valuation is carried out by independent experts taking into account prices that have been achieved for properties in similar areas. This way the bank can protect itself, lending up to 80% of the valuation.

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If a client can't make repayments, what do you think they should do?

Speak to the lender. Simple as that, Lenders can devise a method of repayment that will help the borrower. A typical remedy would be an interest-only mortgage.

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Do you know the difference between Traditional and Islamic finance?

With a Traditional mortgage you own the property. Whereas with Islamic finance, the lender owns the property and you effectively lease it from them. Although in both cases the lender holds the deeds, the property ”owner” would be the bank with an Islamic Lender. Islamic Lenders follow Sharia Law and cannot charge interest, instead they charge a profit on the money lent.

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Why use a Mortgage Broker?

There are quite a number of reasons for this, but most of all is to save you the time and headache of dealing with the many different banks and lenders in the market. There are 30 lenders in the UAE and each has their own choice of product with associated terms and conditions. This can make the market quite overwhelming and confusing, making it best to speak to someone who knows the choices available.

Mortgage Brokers make sure you get the best deal in the market based on your specific financial situation and requirements. They know the pitfalls and delays to avoid by informing the Lender of any peculiarities that may be pertinent to your particular case, and ensure your paperwork is correctly completed and followed through with the Lender. All leading to smooth negotiations between Bank, Seller, Buyer and Solicitor.

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What does LTV and FTV stand for?

LTV: Loan to Value

FTV: Finance to Value

Both terms mean the same thing.

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