DUBAI 11 October 2019: The UAE Central Bank has announced a cut in mortgage exit fees.
The circular published by Central Bank states that early settlement fees will be reduced to 1% or Dh10,000.
The cut provides a more competitive landscape across the mortgage sector, says Stuart Roe, Head of Mortgages at Allsopp & Allsopp. “Borrowing money for a mortgage has never been cheaper than it is now, and the addition of this new law means that home owners can move more freely amongst mortgage providers to take advantage of future mortgage rate changes.
“Sellers can take advantage of this low rate and remortgage or sell avoiding high exit fees. Owners that have been trapped with high interest rates, with no ability to find other products because of the 3% penalty previously imposed, now have the freedom to look elsewhere for the best rate. For example, if a borrower has an outstanding mortgage amount of Dh2.5 million, historically they would have paid Dh75,000 on top of other charges to switch lenders, whereas with the reduction in service fees, they will now pay Dh10,000 with other charges additional – a significant drop in exit fees.”
“Buyers can feel more confident knowing that in the future they won’t be faced with high exit fees for selling or otherwise refinancing for a better rate. In my opinion, this will encourage more buyers into the market knowing that they can afford to sell or remortgage in the future. Sentiment in the market will now be much more positive, people will now trust their decision to buy without second guessing themselves in the future.”