Mortgage Finder says very few banks have removed age limit requirement despite a UAE Central Bank circular issued last month
Very few banks in the UAE have removed the maximum age limit requirement on mortgage lending despite a UAE Central Bank circular issued last month.
The CBUAE told banks to remove the upper age limit for borrowers which was 65 years if employed by a company or 70 years of age if the client was self-employed in a circular sent in October.
It said “the maximum age at the time of the last repayment should be determined by the mortgage loan providers in accordance with their risk management and lending policies”.
The removal of the upper age limit aims to give banks more flexibility to lend to older clients who want to invest in the property market.
But, Mortgage Finder, a unit of Property Finder, said it has noticed that very few banks have amended their lending policies to reflect this change since its introduction in early October, with most banks opting to retain an upper age limit and only considering older borrowers on a case-by-case basis.
“This is yet another positive move from the UAE Central Bank and one which we welcome. We just hope that more banks take it onboard and decide to lift their age restrictions to widen the market and make finance more accessible for older buyers,” said Warren Philliskirk, director at Mortgage Finder.
It is common in countries across the world not to have a maximum age limit, but rather other factors will be considered such as the retirement age in the country and whether the borrower has other regular income sources to cover the mortgage repayments.
Data provided from a leading UAE bank showed that 44 percent of its borrowers fall into the 30-40 age bracket, 27 percent were in the 40-50 group and 18 percent are 50+. These figures suggest there is a definite market for older borrowers in the UAE, said Philliskirk.
“We are excited to see what the next changes might be. I anticipate that an increase in the maximum mortgage length could further help borrowers. Currently, the maximum mortgage term in the UAE is 25 years, increasing this by just five years would make a dramatic difference. It would bring down monthly repayments as the finance is repaid over a longer period, which would also help some would-be buyers access to the market by making home loans more affordable,” added Philliskirk.
In October, the UAE Central Bank also removed the 3 percent early settlement fee for mortgages, which has been implemented by many banks since the circular was issued.
All rights reserved to the initial publisher for Arabian Business.