Only few banks in UAE have removed the maximum age limit obligation on mortgage lending in spite of circular issued by UAE Central Bank last month. Before the circular issued by the Central Bank, the maximum age limit for borrowers was 65 years if employed by a company or 70 years if the client was self-employed.
The circular 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 new circular about 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.
A unit of Property Finder, Mortgage Finder said it has noticed that very few banks have amended their lending policies to reflect this modification since its introduction in early October, with most banks opting to hold an upper age limit and only considering older borrowers on a basis of case-by-case.
“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.” said director of Mortgage Finder. Warren Philliskirk.
It is very common in countries throughout 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.
“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,” Philliskirk added.