UAE Banks Defer Removing Upper Age Limit For Mortgages, Reveals Mortgage Finder
Relaxing the upper age limit makes bank finance more accessible for clients aged above 65 years
In October 2019, the UAE Central Bank made two major changes to mortgages in the UAE.
The first was to remove the 3 percent early settlement fee for mortgages, and has been implemented by many banks since the circular was issued.
The second was to remove the maximum age limit requirement as at the time of last repayment. Although this circular was issued at the same time as the previous, very few banks, if any, have made any changes to their lending policy to take this into account just yet.
Prior to the circular issued by the Central Bank, the upper age limit for borrowers was 65 years if employed by a company or 70 years of age if the client was self-employed.
The circular removed this limit and stated that “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.”
This removal of the upper age limit gives banks more flexibility to lend to older clients who want to invest in the property market; it is not limited to any particular nationality and is applicable to both residents and non-residents.
However, Mortgage Finder has noticed that not many 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,” says 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.
“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,” adds Philliskirk.
