Taking out a mortgage to buy real estate is a complex procedure in any country, and the UAE is no exception. It is not at all easy to pick a lender from several dozen banks and the best mortgage programme from hundreds. Subsequently, the bank may turn down your mortgage application. To simplify the process and avoid difficulties, many buyers turn to mortgage brokers for advice.
What Is a Mortgage Broker and Why Are They Needed?
A mortgage broker acts as a linchpin between property buyers and the bank. This leads to a reasonable question – why involve a middleman instead of contacting a bank directly to take out a loan? However, first of all you need to choose the right bank from several dozen credit institutions and pick the programme that suits you. Buyers taking out a loan for the first time usually need assistance and professional advice. This is particularly true in the case of foreign citizens who are not familiar with the specifics of the local market and the legal nuances of real estate transactions. This is where a mortgage broker can help.
New buildings in the UAE
A professional mortgage broker possesses the necessary knowledge on the offers available on the housing market, knows the programmes offered by the banks, and will be able to select rapidly from the numerous options available the best one for the buyer. However, they offer far more services than that. A broker will help you compile and send the loan application to the bank, prepare the necessary set of documents and assist with the preliminary approval of the mortgage. In a nutshell, a mortgage broker can handle all the communications with the bank. In addition, the mortgage broker can assist you with the valuation of the property and the compulsory life insurance of the borrower (both are necessary to take out a loan).
Why Brokerage Services Are Useful in Dubai
At present over 30 mortgage lenders operate in the UAE, offering their clients several hundred mortgage programmes:
- for both residents and non-residents,
- for anyone buying a flat or building a house,
- for anyone investing in retail or office properties,
- for anyone refinancing a mortgage, and many other people.
All the programmes differ in maturity periods, credit limits, interest rates, repayment terms and conditions, the requirements on the applicant and other parameters.
A mortgage broker is there to select the optimal mortgage programme based on the customer’s individual circumstances and requirements. Another advantage is that a mortgage broker is not linked directly to certain lenders and consequently is able to find a mortgage programme in line with the requirements of the customer rather than the interests of a Dubai bank.
A mortgage broker helps the customer navigate the entire mortgage process and the purchase of the property, starting with initial consultations on the product and ending with the legal transfer of title.
How Much Do Mortgage Brokers Cost in Dubai?
On average, mortgage brokers in Dubai charge AED 2,000 to AED 5,000 (from USD 544 to USD 1,360) for their services. Some brokers may charge 1-2% of the value of the mortgage transaction. In any case, buyers need to find out how much the broker would charge at the start in order to avoid any misunderstandings. Experts also advise you to crosscheck two or three such companies to compare the pricing and service portfolio of competitors.
How to Pick a Mortgage Broker
Before looking for a mortgage broker, potential buyers should independently check the mortgage market. For example, they can use a mortgage calculator and consider several loan options in order to understand the timeframe of the loan and the interest rates available for such a period. This service is free and can be found on a number of Dubai websites connected to real estate. Naturally this will only provide a very approximate figure, as the calculators do not consider all available programmes. However, when the potential buyer subsequently contacts a mortgage broker, he or she will have a better idea of the situation on the market and will be able to determine whether the selected mortgage programme is the best one out there.
You will find a large number of mortgage brokers in Dubai which all have different work experience (most frequently from ten to twenty years). Some of them are ready to provide services round-the-clock, others do not charge for the first consultation, while still others appoint one manager to help the customer from beginning to end. This is a good starter pack.
However, before selecting a mortgage broker, check that the company operates legally. Mortgage consultants in Dubai must graduate from the course Certified Mortgage Brokers (CMB). The certificate is issued by the IE Real Estate Institute of Dubai. You should also find out if the company has a professional licence in the sector.
A list of certified mortgage brokers in the UAE can be found on the Profezo platform. You can look for the information on certificates and licences on the websites of the actual companies.
In a Nutshell
A mortgage broker can simplify the purchase of real estate in the UAE. They take on all the mundane tasks, from picking the bank to handling the legal intricacies of the transaction. At the same time, it is essential that you check that the mortgage broker is accredited and officially has the legal right to provide services.
Cover photo: Kadir Avşar (Pexels)