How to Save Thousands on your UAE Mortgage

There is speculation that interest rates on UAE home loans will rise above the 10% barrier in the coming months; there is a psychological aspect to this as well as the a financial and the rise may prod some home owners to look at an alternative source of finance.

For those who own property elsewhere in the world, there is often a simple answer which can save thousands a month in unnecessary interest repayments and increase the ‘stability’ of their debt.

By re-mortgaging a property elsewhere in the world, it is often possible access rates substantially lower than those available to us in the UAE whilst moving the loan to a country with tried & tested financial regulation, better compliance & complaint procedures and a stable property market with historical housing prices.

For example, European interest rates are currently 3.75% which means an expatriate with a property in Ireland (or Spain, or France as other common examples), could obtain property finance in the region of 4.5% - under half what is on offer in the UAE.

To put this in financial terms, this would reduce the annual interest repayments on a loan of AED 1,000,000 from AED 95,000 a year to AED 45,000 a year – a saving of AED 50,000 a year just on interest paid to the bank! Use that AED 50,000 to pay off some additional capital over the year and the savings in following years will grow exponentially and knock years of your mortgage.

Whilst interest rates are slightly higher in the UK, it is still possible to re-mortgage at a rate of 5.5%; releasing AED 1,000,000 of equity from a UK property and using this to pay off the UAE mortgage would still save AED 40,000 a year in interest.

What is more, with the Euro at an all time high against the Dollar (and therefore the Dirham), and Sterling at a 26 year high, the amount of capital you need to release is smaller than it would have been 3 or 5 years ago. Those really looking to take advantage should also read our article on re-mortgaging to Swiss Francs, where interest rates are under 4% on buy-to-let mortgages, this could result in savings of over AED 60,000 per annum in interest from year one!

This is the kind of financial planning we love at Candour Consultancy – huge benefits for simply making your money work smarter.

To find out how much equity you could release from your property, the interest rates available to you and the potential savings you could make, just click here to download a copy of our mortgage questionnaire. Once completed, just fax this back to us and we will email you an obligation free report.