What happens to my mortgage when I leave the UAE?

Laws in the UAE are such that a non-resident is not allowed to leave the country with debt – in fact, stories exist of people being stopped at the airport and simply prevented from getting on a plane with debt! So, should you be worried about your mortgage if you want to stop being a resident in the UAE and return to your home country? Of course not – here at Mortgage Finder we have all the answers!

Can I leave the UAE with a mortgage?

Yes. Much can depend on the exact terms and conditions of your mortgage, but it is usually possible to make the right changes to make sure this happens. At Mortgage Finder we have experts that can help you make this a smooth transition, whether you want to rent the property out or just keep it as a holiday home.

What do I need to do to convert my mortgage to a non-resident mortgage?

You will need to talk to your bank. Many lenders are fine with a simple adapting of your mortgage, although this may have an impact on the interest rate and terms of your mortgage. It will no longer be a resident mortgage, but a non-resident mortgage which can sometimes carry a higher interest rate and different terms.

The prohibition on leaving the UAE with debt is to protect the banks from losing their money, but with a mortgage the property still exists as security and if it becomes necessary, the bank can foreclose on the property and protect themselves in that way. Consequently, the rules regarding leaving with a secured loan, such as a mortgage, are slightly more relaxed than those with unsecured personal debt.

Can I keep my bank account?

You will need to keep your UAE bank account in order to continue to make payments on your mortgage, although it will be converted to a non-resident account, which means you will be unable to draw on credit against it (such as any overdraft facility). Often, your current account will be at the same bank as your mortgage and any changes needed will be simple, but if you have a different bank for your day-to-day banking then you will need to discuss the situation with both.

Your UAE account will also be useful for paying any third parties for work relating to the property.

Without any overdraft facility, you will need to make sure the balance of your UAE account is sufficient at all times to cover any mortgage payments drawn on it.

What do I tell the bank?

It is important that you let the bank know how you intend to keep up the payments on your mortgage.

If you are converting the property to a rental, then you will need to do the maths to see if the rental income at current market rates will be sufficient to cover the mortgage and service charges for the property. It is also a good idea, where possible, to have the monthly rental income provide a small buffer to cover periods when the home is tenantless or should any problems occur. If the rental income does not at least cover the mortgage and service charges, then you will have to make transfers to subside these payments.

You can leave the property vacant and continue to make mortgage payments through your salary until you return, but you should make your plans clear to the bank and ensure that you have the funds available to keep up with the mortgage while away.

Ultimately, the bank will just want to be satisfied that you are able to keep up the repayments without a problem and if you can show that, then there is unlikely to be a problem.

Will I be asked to settle the mortgage?

In rare circumstances, the bank may ask for you to settle the mortgage in full before you leave the country. This will leave you with three options:

  • Paying the remaining balance in full through your own means
  • Selling the property and paying off the mortgage
  • Refinancing with a non-resident mortgage through a different lender

Remember, that if you do settle the mortgage early through any of these means, you may be charged an early settlement fee that is typically as high as 3% of the remaining balance. This early repayment charge will have been part of the terms of your mortgage when you applied for it, so check your documentation for full understanding of any early exit fees.

How can Mortgage Finder help?

At Mortgage Finder we have a dedicated team who are experts in dealing with non-resident mortgages and the changeover from a resident position for those planning on leaving the UAE, whether permanently or for a few years.

It is important for you to have an exit plan in place for any unforeseen circumstances (as well as for any planned ones!) and our advisors are here to help you work out what is right for you. If you are yet to get a mortgage then we can make sure you get one that is right for your needs and any potential changes in your lifestyle for the future, whether that be low exit fees or the flexibility of easy conversion to a non-resident mortgage.

If you already have a mortgage then we can help you understand the terms of that loan and, if necessary, help you find a suitable refinancing option to move your loan to a bank with more favourable terms that fit in with your future plans.

Give us a call today, or fill out our contact form to have one of our experts get back to you at a convenient time and do away with any worries you might have.