Dubai represents a land of ideal opportunities, which is why so many Brits settle in the city every year. However, in a rush to get their dream lives started, it’s easy to forget that every mortgage product and lender is different.
Accepting the first mortgage offer you’re given is a reactive decision that won’t necessarily pay off for you. If you’ve been thinking about your mortgage lately, you might be wondering if it’s possible to change your provider.
To answer all your questions on switching lenders, we’ve put together this article with all the details you need.
Can I Change my Mortgage Provider?
Yes! Whether you’re a natural UAE citizen or an expat, you can change your mortgage provider if you want to.
Alternatively, you may be happy with the service from your current lender but you want to change the product. Some people wish to review their mortgage options but stick with the same provider because there is less paper work involved and fewer fees.
Both options come under the umbrella term “remortgaging.” This is where a new mortgage replaces your existing one. If you’re switching to a different lender, they essentially “buy out” your existing debt.
It’s important to remember that remortgaging isn’t cost-free. In order to change mortgage provider, you will have to pay certain fees.
That said, a different mortgage product has the potential to save you thousands of dirhams over the lifetime of the mortgage, so it can be worth the upfront costs. If in doubt, ask a professional expert for advice before switching.
When changing mortgage lenders or products, you may be charged with the following fees:
- Mortgage Deregistration: AED 1590
- Property Valuation: AED AED 2500 — AED 3000 + VAT
- Mortgage Reregistration: 0.25% of the mortgage amount and an additional AED 290
- Mortgage Registration Trustee: AED 2000 + VAT for properties with a value under AED 500,000. For properties with a higher value, the cost is AED 4000
Exit penalties are also common. If you remortgage with another lender, your new lender will take on the cost and add it to your mortgage. You can be charged up to 1% of your property’s value or AED 10,000 — whichever is the lower amount — if you exit your existing mortgage early.
There are also some criteria you must meet to achieve a lower remortgage rate. The lender will carry out an assessment of your financial circumstances, and this could make things easier or harder to get the deal you’re looking for.
As a few examples, if you’re on a higher wage, more lenders will be happy to provide you with a more favourable rate. But if you have more monthly outgoings, you may struggle to find lower rates than what you’re offered without professional help.
Why Do You Want to Change Mortgage Provider?
Before you change mortgage provider, it’s first important to understand why you want to switch to begin with. By knowing the exact reason why you want to move, you can avoid falling into a similar situation a year down the line.
If it’s a matter of poor customer service, independent brokers such as ourselves can point you in the right direction of mortgage lenders who have a stellar reputation.
However, the more common reasons for wanting to change mortgage providers are:
Your Fixed Term Deal is Ending
When your fixed term mortgage comes to an end, you will be moved onto a variable rate mortgage. When this happens, your interest rate will revert to the lender’s standard variable rate (or SVR for short).
These rates tend to be higher than the fixed rates you’re used to paying, so looking for a new mortgage provider at this point could save you a great deal of dirhams.
Take a look at our blog comparing fixed rate and variable rate mortgages if you’re unsure of how each product will affect your payments.
You Want to Overpay Your Mortgage
It might sound counter-productive, but banks don’t want you to pay off your mortgage faster. The profit from mortgage lending comes from interest rates, so if you pay off your mortgage years in advance, lenders will lose out.
To counterbalance this, providers can charge you a fee for overpayments. If you want to pay your mortgage off faster, but the penalty charges are putting you off, changing your provider could be your best bet.
However, don’t forget you will still face remortgaging fees, so speak to an independent advisor before making any decision to see which is the most financially viable for you.
You’re Eligible for a More Competitive Tier
Over the years, you may become eligible for a more competitive mortgage tier. This happens when the loan-to-value (LTV) between your home and mortgage decreases, such as when the value of your property increases.
How Do You Change Mortgage Providers?
There are two main ways you can change mortgage providers:
- By yourself
- With Expat Mortgage
Switching by yourself is a difficult and time-consuming process. You’ll need good working knowledge of how mortgages work, the type of products that will work best for you, and you’ll need to understand how being in Dubai alters what you already know about the process.
Then there’s the matter of approaching every lender to get the best rates. Speaking to all of them and going through negotiation stages isn’t quick or simple.
Expat Mortgage will save you the greatest amount of time and money. We have established working relationships with the most reputable lenders across Dubai. This takes out the guesswork for you and opens up exclusive rates that you otherwise might miss.
On average, our clients save up to AED 150,000 over the lifetime of their mortgage. That’s equal to £30,000.
If you want to change mortgage provider the easy way, speak to a member of the Expat Mortgage team.