Introduction to the Mortgage Transfer to another Bank or Financial Institute
Ever felt like changing your lender? Sometimes it may happen that while you are in the midst of paying back your home loan, you discover that there is a better mortgage out there which will be more affordable. It is but natural that you start considering shifting to the bank which is offering to refinance your existing mortgage. There are lots of things that make refinancing a mortgage a good idea and the chief among them is that if can help ease the pressure of monthly payments. You can also walk away with lower interest rates than what you are already paying and special offers like waiver of fees like valuation and processing charges, depending on the bank.
Features of Mortgage Transfer
Some of the most common features that you can expect to see with a balance transfer of mortgage are:
- Loan Amount: Most banks that provide buyout loans for your existing mortgage offer loan amounts that can range from AED 20 million to AED 25 million, depending on the bank you approach.
- Interest Rates: With many of the banks offering competitive interest rates, you can expect to be offered an interest rate that is in the rage of 3% per annum to 5% per annum. This again, depends on the bank you approach.
- The interest charged can also be a combination of variable and fixed interest rates. In such a case, the initial repayment period will offer a fixed interest rate after which the variable rates will be applied.
- Tenure: The tenure for the buyout loan can be as high as 25 years.
- Pre-payment: Once the home loan has been transferred to the new bank, they may allow you to make prepayments towards the loan and specific intervals.
- Some of the banks will also offer life and property insurance when they offer you a mortgage balance transfer.
Eligibility Criteria and Documents Required
Just as it is with every other home loan, there are some eligibility criteria that you need to meet and documents that you are required to submit. These are:
- You can take this loan if you are a UAE national or an expatriate with a residence permit.
- You will also have to be between the ages of 21 years and 70 years.
- You will also have to be either salaried or self-employed.
- The minimum income requirement depends on the bank you approach but it can be as low as AED 15,000 per month.
- Identity proof in the form of a passport of a national ID card will be required.
- For expats, a valid residence visa will also be required.
- If the bank requires a salary transfer then a letter for salary transfer will have to be provided.
- Bank statements will also be required to secure the loan.
- Property details like deeds and other certificates may also be asked for by the bank.
Benefits of Mortgage Transfer
Each bank offers various benefits for the mortgage balance transfer loans. Some of these features are:
- While some of the banks ask for a salary transfer many banks require no salary transfer for this loan.
- As a special feature, some bank even offer a top-up amount when you transfer the loan to them. The purpose of the amount is to help you with furnishing the new home.
- Many of the banks will also offer incentives like free insurance and evaluation for the property.
- If the property is meant to be rented out, you can even pay back the loan from the income from the rents.
There are lots of advantages to using BankBazaar to find the ideal buyout loan in UAE. The biggest of these is that the site allows you to gather relevant information without any hassles and even compare various loans within minutes. The information provided is also well researched and highly accurate.
Frequently Asked Questions - FAQs
Q. Will I have to open an account in the bank to get a mortgage transfer?
A. The requirement to have an account with the bank offering the balance transfer depends on the bank you approach. While some may require it, many banks don’t.
Q. Is the interest rate different for a new home loan and buyout loan in UAE?
A. With some of the banks, yes. They tend to offer a lower interest if you go in for a balance transfer as compared to the rate on a new home loan.
Q. Can I take a buyout loan if I don’t live in the UAE?
A. Yes you can take this loan even if you are not a UAE resident, however the approval of the loan will be done at the discretion of the bank.
Q. Will I have to pay a balance transfer fee?
A. Such a fee may be required by the bank which had given you the original home loan. It could be the lower of about 1% of the outstanding balance and AED 10,000.
Q. Are life and property insurance necessary?
A. Yes. It is mandatory to have both property and life insurance when you go in for such a loan.