Mortgage rejection reasons in the UAE
Mortgage applications are not always approved, because sometimes a person doesn’t meet all of the eligibility requirements (which are there to prove that you're a trustworthy and investment-worthy consumer). Some rejection reasons are more common than others, but it's important to be familiar with them because sometimes you can avoid rejection beforehand. Following are a few reasons why a mortgage application may be rejected.
Mortgage rejection reasons
Low income
You may not be approved for a loan if you have a low income. Most banks require a minimum salary of AED 15,000, or AED 25,000 for self-employed borrowers.
Debt-burden ratio too high
The debt-burden ratio or affordability shows if you can meet your monthly mortgage payments. If you have nothing left after deducting your monthly commitment from 50% of your salary, you don't meet this requirement.
Dishonesty or misrepresentation
Banks conduct thorough research on potential clients, and they will only accept your application if you provide accurate, honest and clear information about yourself.
Bad credit history and score
Credit score and credit history are crucial in mortgage lending because they indicate the likelihood you will make your payments on time. It is a record of how someone handles money and debt, including credit card debt and other loans.
Age and nationality
The minimum age to apply for a mortgage is 21 years and the maximum age is 70. As for nationality, while the criteria are different for UAE Nationals, expats and non-residents, some countries in the world are on the sanctioned list and UAE banks won’t do business with their citizens.
Employment issues
Your employment history, employer, employment status very much affect the outcome of your mortgage application. If you work in a company with a good reputation, that operates in a low-risk industry, or a larger company with a stable future, then it’s more likely that you’ll receive financing from banks. Also, the longer you've worked for the same/current company, the better your chances of getting approved for a mortgage are.
Failed stress test
The market and economy are liable to change, which means interest rates can fluctuate. Stress tests are used by banks to determine whether you could afford to pay your mortgage if the situation were to become more difficult than usual.
Overpriced property
Discrepancies in the mortgage terms may arise if the bank evaluates the property for less than what you offered to pay, which can lead to difficulty in completing the deal, which may result in an increase in your initial payment or a sudden price adjustment.
Incomplete documentation
Your application is likely to be denied if you do not submit all of the required documents or if the documents are not in line with the prescribed requirements.
Final thoughts
You can increase your chances of getting a mortgage in the UAE by speaking to one of our mortgage advisors, who will determine if your current financial situation is adequate. Even if you don't meet the eligibility criteria at the moment, Kredium can assist you in overcoming any obstacles and ensuring a successful mortgage application. Not only that, we can provide end-to-end guidance, free mortgage pre-approvals and expert support. All you need to do is sign up. Check out our blog section for more information on real estate and mortgages in the UAE. We also offer at your disposal the following:
Mortgage calculator for estimating mortgage installments and rental profit
Properties portal with over 5000 ready-to-move-in and off-plan properties
Mortgage offers for UAE nationals, expats and non-residents.
Photo credits:
Christoph Schulz | Unsplash
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