Looking to get a mortgage? Some important points to keep in mind before you do.
Taking a mortgage is a huge financial decision. Before taking the leap, here are a few things you may want to consider:
1. Selecting the right product:
With more than 20 banks offering 200+ mortgage products selecting the right one maybe a daunting task. Many times people get excited by the headline rate and do not take into consideration the rate after the fixed period and the other terms of the product. It is important to evaluate the product as a whole including the rate after the fixed period, the insurance costs, pre-closure fees, etc. Choosing a wrong mortgage product may end up costing you heavily.
2. Applying for a pre-approval before the property search:
If you plan to buy a property with a mortgage, it is important to first apply for a pre-approval before you start searching for properties. Getting a pre-approval will give you the budget to search within. With a pre-approval in place, it will make your process to complete the purchase much smoother and faster. Having a pre-approval also gives you better negotiating power with the seller as you are considered as a serious buyer.
3. Making all financial details available prior to the mortgage application:
It is most important to be transparent about your financial history prior to applying for a mortgage. With the launch of the Al Etihad Credit Bureau, all your financial history is available to lenders. Provide all details about any liabilities that you may have along with proof of these liabilities with your application. In case if you are aware of any bounced cheques it is better to inform the lender during the application to make sure these are cleared out. The last thing you would want is to apply for a mortgage, selecting a property and then having the mortgage being rejected due to any problems in the credit bureau report. You can also go to Al Etihad Credit Bureau and check your credit score prior to the application (https://www.aecb.gov.ae/credit-score#how-do-i-get-mine)
4. Property Purchase Related Associated Costs:
When purchasing a property, it is also important to keep in mind the various associated costs that you will incur. Find out what the charges are prior to selecting a property. You may get a mortgage approval for a high valued property and have the down payment to pay for the same. However, you also need to keep in mind that you will incur up to 8% of the property value as property purchase related associated fee. You will need to have these funds in place for the transfer of the property under your name.
5. Other loan applications:
If you are planning to take any other loans or apply for a credit card it is better to do so once you have completed the mortgage process. If you apply for any additional loans during the mortgage process and this reflects on your AECB report it may affect your mortgage application negatively.