Congratulations! You have taken the giant step to own your property! I hope this article will help you assess and find the best mortgage on the market.
How much time did you spend shopping around for your best pair of shoes ? Well, you should be willing to spend at least twice that time shopping around for a mortgage. There are 30+ banks in the UAE offering more than 300 home loan products. You need to be able to understand the terms of every home loan to know if it is the right mortgage for you.
Here are 10 things to keep in mind when shopping for a mortgage:
1 - The mortgage with the lowest interest rate might end up being the worst option
Make sure you are comparing apples to apples in the mortgage world. Which is better: a mortgage with a reducing rate of 3.24% or a mortgage with a flat rate of 1.79%? Hint: it is a trick question - both mortgages cost the same. Sometimes banks quote a flat rate for marketing purposes. Make sure you check if the rate you are looking at is a flat rate or reducing rate. In case you don't know the difference, a flat rate is the interest or profit paid on the full mortgage amount every year. A reducing rate is the interest or profit paid on the outstanding mortgage amount every year. To calculate the equivalent reducing rate, multiply the flat rate by 1.814. Note - It is very common to speak in reducing rates rather than flat rates in the mortgage world as most available home loans are reducing rate loans.