Abu Dhabi: The UAE’s apex bank, the Central Bank of the UAE (CBUAE) has issued a notification addressing all banks and finance organizations operating in the UAE about housing loans granted to beneficiaries of the Home Finance of the Sheikh Zayed Housing Program (SZHP).
The notification discussed about the details of the CBUAE decision, in agreement with SZHP and in line with Article (5) of the Regulations Regarding Mortgage Loans, issued in 2013.
RAISING DEBT BURDEN RATIO
The new resolution allows the Debt Burden Ratio (DBR) of the beneficiaries of the Home Finance Program of SZHP in monthly installments out of their total salary or any income from a known specific source to be raised from 50 percent to a maximum 60 percent.
The decision also stated that UAE nationals, with long-term loans, shall be provided the flexibility to obtain housing loans of SZHP, after ascertaining their ability to pay within the DBR limit of 60 percent.
PROVISIONS FOR RETIREES AND SENIOR UAE NATIONALS
Banks have been allowed to raise the DBR for retirees and senior UAE nationals from 30 percent to 50 percent, so that they can benefit from SZHP housing loans, after ascertaining their ability to repay, within the DBR limit of 50 percent, and after obtaining from them a no-objection statement to increase the monthly deductions against the housing loan.
According to the new resolution, the SZHP housing loans borrowers’ contribution of 15 percent in the down payment for the housing loans that their profit/interest is guaranteed and paid by the Federal Government, has been cancelled unless the property to be constructed/purchased through financing is the 1st house for the UAE national and to be used for his personal residence.
If the amount of the loan exceeds the amount of loan profit/interest of which guaranteed and paid by the Federal Government, the UAE national shall be required to pay, from his own resources and not from other lending sources, the difference in the payable ratio of the down payment of 15 percent required by the regulations.
Compliance with all other requirements stated in the Mortgage Loans Regulation and amendments thereto.
The CBUAE is keen to support the UAE government’s efforts to achieve happiness, housing stability, and provide comfort and well-being for its people, in light of the new policy for federal government housing loans that was approved by the Cabinet to provide financing for housing loans in partnership with the private sector and national banks. This will reduce the waiting period for housing applications.
MORTGAGE LOAN REGULATION
Issued by the CBUAE, the Mortgage Loans Regulation strives to set acceptable minimum standards for mortgage collaterals to safeguard the financial sector and consumer.
It also aims at promoting financial stability and contribute to sound development and organization of the mortgage loans market in the UAE, employing appropriate and advanced regulations.