The buying process has several steps and many different parties involved, some of which have conflicting interests. This can make the journey more complicated in some cases, highlighting the need for experienced professionals to help guide you through and spot any anomalies.
We were approached directly by these clients as they had heard various stories from their peers about problems and issues along the mortgage and buying journey. They were keen to get professional advice and assistance in order to minimize the stress and effort required from them as they both worked long and irregular hours in the aviation industry.
The clients, originally from England, were a newly married couple wanting to buy an apartment in JBR. This would be their first-ever property purchase as they had not bought in their home country either. They were earning a good combined salary and wanted to buy a property together, taking their joint income into account for the mortgage. However, they were quite cost conscious as they were also paying off other car loans and liabilities.
The clients were looking for a mortgage which allowed them to include the fees associated with buying within the mortgage, as they did not have sufficient funds upfront to cover all of the fees as well as the required down payment.
|A select number of banks in the UAE will allow you to include some of the purchasing costs, such as the DLD fee and real estate agent fee, within the mortgage. In some instances this can increase your buying power by up to 24%. You can read more about this here.|
The first bank we approached with the clients’ case rejected the application because the clients were borrowing at maximum affordability and narrowly missed the bank’s stress and affordability tests. We took the application to another bank who accepted it and issued pre-approval within a short space of time.
Following successful pre-approval, we continued to manage the mortgage and purchase as normal – taking all the necessary steps and checks. However, as we approached the final stages in the process the seller became increasingly forceful; pushing our clients to complete the purchase faster and requesting that the lending bank disburse (issue) the mortgage prior to final checks.
The sellers’ requests were unusual and made our team suspicious as it is not common practice to have the mortgage disbursed prior to the bank’s final checks and issuance of clearance documents.
We asked the client and the bank to refrain from transferring any funds until all checks were completed and the NOC had been issued by the property developer – which is one of the final stages in the process.
When the developer refused to issue the NOC, as we shortly found out, our suspicions were raised further. At this stage, we contacted the developer directly to find out the reason for this and they informed us that the seller still had outstanding loans secured against the property so they could not give permission for it’s sale.
It then became clear as to why the seller had been wanting to complete the purchase sooner – so they could use the funds from the sale to clear some of their outstanding debts. If we had complied with the sellers original requests to complete on the purchase prior to all checks and allowed the bank to disburse the mortgage, this would not have been in the clients’ best interests. This is because once the mortgage had been disbursed the clients would have been liable to start paying interest on the loan, but they would have been unable to take ownership of the property without the NOC from the developer.
We managed to save the clients from having to pay out in fees and interest on a property they could not legally take ownership of since it still had an outstanding loan against it.
The clients decided at this stage to pull out of this purchase and look for another property. They found and completed their purchase of a different property a few months later with our assistance.
How can we help you?
There are various steps in the mortgage process where challenges can arise. We work on your behalf to make sure the mortgage and purchasing journey progress as smoothly as possible. Where there are issues, we are thorough in our approach so that these are dealt with in a timely manner and make sure the solutions are in your best interest.
Case study by Charlotte Stanley, Senior Mortgage Consultant