# best bank to take home loan from ?



## adil.khan

Hi,

i have been in dubai for last 8 months. Since i have a stable job ( atleast i wanna believe that way) i am planning to buy an apartment rather than burning my money on the rent. I have checked different banks , but since i am new to this , i have no idea where to start . I have asked different bank reps to meet me in the coming week. 
Can anyone advice which bank is the best to go with for home loan ???


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## Lenochka

I would think long and very hard about buying...
remember...the quality of most apartments is poor....
the maintenance expensive.....and
most importantly.....to own an apartment does not give you the right to stay in the country......

nevermind the fact that there are a gazillion of emtpy apartments around, hence the chance of a price increase/value gain is very very small....


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## pamela0810

I second each and every comment from Lenochka.

I would not want to be tied down to this country because of a loan. There is always that "what if..." situation that just might come up one day and you will need to pack up and leave.


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## Bigjimbo

You can argue about both these points pretty much anywhere in the world. Dubai still has a lot of positives, and the massive correction that has happened has only made living in Dubai easier and more desirable! Short term yeah, forget making profit, but a lot of people don't buy to make money, they buy to live there!


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## rsinner

I have no experience of taking loans in UAE, but talking to a few banks when I had briefly thought about a loan when buying my car (i didn't take the loan) I found that ALL of them had exactly the same rate The documentation requirement for HSBC, but Mashreq was a bit more relaxed on this. I have also heard that RAK Bank is quite aggressive these days in selling its products (loans and credit cards). However, there are other banks as well and at the end of the day my impression is there is not much difference - however do take your time with the reps and prepare a list of questions while researching online. I am also pretty sure that all will ask for post dated EMI cheques upfront

However, I would also second the comments above - what happens if unfortunately you lose your job? You cannot stay in the country, and you cannot leave the country (legally) without paying off the loan.

The second thing to consider is buying an apartment which is under construction versus one already constructed. Also, do research your rights as far as building maintenance fees and in general vis-a-vis your developer are concerned. Also, many members on the forum recommend hiring a lawyer. WHile a number of people have burnt their fingers with home purchases, there are also some people (a couple on this forum as well) who have had good experiences with their purchases


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## remaaz

greetings,

honestly I didn't deal with alot of banks but never go to almasherq bank it has very bad reputation.

Personally I'm dealing with Abu Dhabi Islamic bank they are good but as an Islamic bank they won't give you cash money they will pay the owner directly and I think they take 9-9.5% fixed

You can get your money cash by doing shares finance then you can sell them at the same moment or it depends on you, the interest rate is 6.75 - 7.5% and they may ask for a trading license depending on the amount.

Don't forget that the new law says that loans maximum is 20 times of your salary.

Regards,
A.rahim


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## CrowdedHouse

I would be very careful. If you lose your job your bank account will be frozen immediately. If that happens and you have loans out, it'll take you longer to rectify and activate the account. Good luck, you are a brave soul!


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## indoMLA

remaaz said:


> greetings,
> 
> honestly I didn't deal with alot of banks but never go to *almasherq bank it has very bad reputation*.
> 
> Personally I'm dealing with Abu Dhabi Islamic bank they are good but as an Islamic bank they won't give you cash money they will pay the owner directly and I think they take 9-9.5% fixed
> 
> You can get your money cash by doing shares finance then you can sell them at the same moment or it depends on you, the interest rate is 6.75 - 7.5% and they may ask for a trading license depending on the amount.
> 
> Don't forget that the new law says that loans maximum is 20 times of your salary.
> 
> Regards,
> A.rahim


Kinda off topic, but please explain this further... I am trying to get a loan with them and they are slow... I thought this was a one off, but if you have other information to substantiate your assessment, please share.


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## Lenochka

Bigjimbo...
that's exactly the point....and not true ! you can't argue with all these points anywhere in the world. 

a) there is a hardly a place on this planet with that many EMPTY apartments waiting for some sould/sucker to rent/buy it....with a LL who may not be able to pay the maintenance fee without your next rent cheque....or a developer/management company who feels suddently that the obligations have suddenly changed....

b) in almost all other places if you buy an apartment, i.e. invest a substantial amount of money in the economy, you get the RIGHT TO LIVE THERE ! 
In the UAE, you don't....unless you have a company/job who
sponsors you, you are F$%^&$%D ! Get out asap is then the motto ! 

c) yep, people live there...however, with the unpredictability in those kind of rough times, nevermind the ambigous legal framework in the UAE taken into consideration, I would NOT want to be tied with a loan I can't repay in full at any point in time !

Anyway, that is MY HUMBLE OPINION and of course others might see this different and are willing to take more risk. I ain''t......


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## Lenochka

Bigjimbo...

sorry, forgot to add.....yes, Dubai has a lot of positives....

but, in my humble opinion, all can be had and enjoyed 

WITHOUT OWNING AN APARTMENT 

:clap2:


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## Roderick0759

*Purchase Loan*



indoMLA said:


> Kinda off topic, but please explain this further... I am trying to get a loan with them and they are slow... I thought this was a one off, but if you have other information to substantiate your assessment, please share.


As I have been a UK mortgage broker for 23 years and UK IFA since 1999 I can tell you that you can beat that rate here in Dubai. Do yourself a favour and get independent advice. If you want my help just ask.


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## adil.khan

I thought hard enough before making this decison of taking a loan and buying an apartment. But every person i meet has reservations regarding this. I dont know what to do . super confused. 
I am 27 , recently married with no kids , i get paid 24k DHMs , i have rented an apartment in The Greens for 65k in one cheque , I still think , giving rent is like wasting your money.


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## Lenochka

It is not wasted money - you buy the right to use an apartment and its facilities for an agreed lenght of time ! 

On the positive side you do not own any big chunk of money to some bank who will be very quickly put the knife to your throat in case you are not able to pay the installments anymore ! there is NO real culture of "let's discuss the situtation and come to an amicable agreement to sort/extend the issue" in case ANYTHING goes wrong. Could you be your, could be your personal circumstances......hell for what I know, it could be that the UAE government suddenly decides that they do not give people with your passport visas anymore....

Now, if you are willing to take all these risks and are comfortable that you can work it out, should you encounter any issues such as jobloss etc. - then by all means - go for it !

However, I think there is a reason, and I quote you" 

" every person i meet has reservations regarding this"

Now you asked the Forum for input...the general consensus is obvious to me....
if you want to ignore it, your call


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## remaaz

Dear IndoMLA,

My judgement was not a personal experience but it's a sum of friends experiences.

For example:

One of my friends ( long time back ) took a loan to buy an Audi S8 for 300k without considering the profits and the installments where on 60 -72 months not sure, after he paid for third or more of the period he tried to settle down his loan .

The remaining amount was 300K again. So, your first year even second year installments will be paying the profit only. Later on you will start paying for your real loan.

You can confirm that with the bank, because they might change their system. Anyway we call it locally Al masheq Bank. Almashneq is the place where they hang people. 

To conclude, this is my personal opinion so please feel free to choose.

Regards,
Abdulrahim


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## indoMLA

remaaz said:


> Dear IndoMLA,
> 
> My judgement was not a personal experience but it's a sum of friends experiences.
> 
> For example:
> 
> One of my friends ( long time back ) took a loan to buy an Audi S8 for 300k without considering the profits and the installments where on 60 -72 months not sure, after he paid for third or more of the period he tried to settle down his loan .
> 
> The remaining amount was 300K again. So, your first year even second year installments will be paying the profit only. Later on you will start paying for your real loan.
> 
> You can confirm that with the bank, because they might change their system. Anyway we call it locally Al masheq Bank. Almashneq is the place where they hang people.
> 
> To conclude, this is my personal opinion so please feel free to choose.
> 
> Regards,
> Abdulrahim


Wow. I don't think they can do that as you should always being paying a portion of the interest and the principal at the same time. Initially, you pay a lot more interest than principal, but as the loan term grows, you pay off more principal than interest. I think in this situation, the terms of the loan may have safeguarded the banks interest payments and therefore the full principal amount was due. Also, I have noticed that banks impose a fee (rather large one at that) if you want to pay-off a loan. Again, the culture is one not for the consumer but for the greedy businesses.

P.S. I have since left Mashreq and am over at EmiratesNBD (heard good things about them).


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## Lenochka

If you owe the bank X then it does not really matter what the proportion of principal or the interest is. The penalty you are refering too are the re-financing costs for an early repayment. 

If you take out a loan you enter a contract....breaking a contract is never free


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## pamela0810

Lenochka said:


> If you owe the bank X then it does not really matter what the proportion of principal or the interest is. The penalty you are refering too are the re-financing costs for an early repayment.
> 
> If you take out a loan you enter a contract....breaking a contract is never free


You're a banker, aren't you Lenochka?


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## xchaos777

I have never had a loan in the US or Europe where there was a penalty to prepay in advance. So yes, it has always been free to me so far.


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## rsinner

Be advised though that the way the EMI works here is not the standard way you see all over the world. 

The world over the interest is calculated using a reducing balance of the principal, so that when your EMI is calculated it constitutes more of interest payment earlier and the principal later on.

Here if the interest rate mentioned is say 5% for 2 years on say 50,000 - the way to calculate the EMI is simple. Total interest = 2 years * 5% * 50,000 = 5,000. EMI = (50000 + 5000)/24 months = 2292. This turns out to be equivalent to a 9.5% interest rate had it been calculated on a reducing balance method. So next time someone thinks that loans here are cheap, do reflect on this.

However, I am not sure how each EMI is split up between the principal and interest - need to read the bank's fine print of the terms & conditions (yes the same piece of paper we are likely to sign without reading :d )


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## remaaz

Greetings,

But that never happens with my personal bank Abu Dhabi Islamic Bank. I had my financed throw them, then I decided to fininsh this loan to take a bigger one after a while to buy a land in sharjah.

They just took their money and they deduct 75% of the remaining profit. I've experienced it myself and with my friend even when I bought his car.

so in each installment you are a portion of the original amount and a portion of the profit.

The only thing you may don't like it is that they don't give you cash directly.

Regards,
Abdulrahim


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## Lenochka

Nope, I am not a banker...but have some education in Finance...
hence I know how these things work. In addition i am a banking customer with some of the bigger banks for a number of years...


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## indoMLA

Lenochka said:


> If you owe the bank X then it does not really matter what the proportion of principal or the interest is. The penalty you are refering too are the re-financing costs for an early repayment.
> 
> If you take out a loan you enter a contract....breaking a contract is never free


Understood, Boss... but in most contracts, at least the ones I have been involved in (homes & vehicles), the bank usually has a clause in there where you can pay-off the loan with no penalty, but only after a certain number of years. Most of the contracts I have drawn up have that number at 24 payments (or two years). 



xchaos777 said:


> I have never had a loan in the US or Europe where there was a penalty to prepay in advance. So yes, it has always been free to me so far.


+1 - Although, now some home loans are starting to come with verbiage that states you can only make so many payments direct to principal. That sucks, cause if you ever get a decent bonus from work and don't really need it, then you can jump dump it on the mortgage as a "principal only" payment.



rsinner said:


> Be advised though that the way the EMI works here is not the standard way you see all over the world.
> 
> The world over the interest is calculated using a reducing balance of the principal, so that when your EMI is calculated it constitutes more of interest payment earlier and the principal later on.
> 
> Here if the interest rate mentioned is say 5% for 2 years on say 50,000 - the way to calculate the EMI is simple. Total interest = 2 years * 5% * 50,000 = 5,000. EMI = (50000 + 5000)/24 months = 2292. This turns out to be equivalent to a 9.5% interest rate had it been calculated on a reducing balance method. So next time someone thinks that loans here are cheap, do reflect on this.
> 
> However, I am not sure how each EMI is split up between the principal and interest - need to read the bank's fine print of the terms & conditions (yes the same piece of paper we are likely to sign without reading :d )


You sure about this? This is going to suck.


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## Canuck_Sens

adil.khan said:


> Hi,
> 
> i have been in dubai for last 8 months. Since i have a stable job ( atleast i wanna believe that way) i am planning to buy an apartment rather than burning my money on the rent. I have checked different banks , but since i am new to this , i have no idea where to start . I have asked different bank reps to meet me in the coming week.
> Can anyone advice which bank is the best to go with for home loan ???


Hi,

We all feel like buying our own place in time when we feel we are stable and planning to stick around. Unfortunately, we have to also understand the market conditions and customs in the country we decided to live in.

Interest rates in my opinion are high but you might not perceive them as high as I do. I am paying 2.6% a year back in Canada. The other thing is that if you loose your job as mentioned in other posts will create problems for you.

I think that you are right in pursuing your own home, but I would do what most people do when they buy their first home: SAVE SAVE SAVE and put a considerable down payment or build savings to have a cushion should anything unexpected happen to cover your payments


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## rsinner

indoMLA said:


> You sure about this? This is going to suck.


If you are talking about the methodology to calculate the EMI then errr... almost yes. I have not taken a home loan, but this methodology was being used when I wanted a car loan (and checked with multiple banks; and a colleague had the same calculation as well for his car loan)


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## Tony0202

My two bit of advise on bank interest rates and buying a home in Dubai.

1. Assume for a moment that you will never get capital appreciation in property. I think it is fair to assume that there should not be too much of a downside in the property prices taking today's selling prices. 
With the current buying prices in ready to live premium communities like The Palm, Greens, Meadows, Lakes, Springs, Downtown ...... I personally think the prices are quite attractive.

Why?

A. One can get a net rental yield of 8% (after maintenance costs) which is probably the best in the world.
B. The bank interest rates on fixed deposits in 1% or less (besides, you dont know if the bank will stay in the business and there is no security in the current market scenario).

2. The interest rates on mortgage ranges between 4.5% to 7% p.a which is less than the net rental yield of 8%. As a result you have an arbitrage on the interest rate.

Just go find a good, livable, rent yielding property. Your monthly mortgage installments will get paid by your rent. Five years down the line, you might have made a fortune.

Cheers!
Tony


Disclaimer: I personally own 2 properties and the bank installments get paid by the rent. I am in no hurry to sell.


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