When you borrow a sizable sum of money from a lender and pledge your property as collateral, the process is known as equity release, also known as a loan against property for sale in Dubai.
One of the least expensive ways to borrow money is through loan against property, which is a regular and well-liked strategy used to leverage the financial value of a home worldwide. Most of the time, those who apply for a mortgage can use the possible residential property as collateral for the loan. The ability to withdraw equity from your residential property is probably the biggest benefit of equity-release financing alternatives. Expats living in the UAE may borrow up to 75% of the value of their homes, and once the money is disbursed, it is yours to use anyway you see fit.
This article will discuss the purpose and benefits of equity release loans in Dubai.
The Purpose of Equity Release Loans in Dubai
A loan against the property is how equity releases are referred to. In essence, the bank lends money based on the borrower’s assets. From the bank’s point of view, the borrower has provided property as collateral. From the standpoint of the clients, capital can be released from an existing property, and they can spend the money however they want to.
This kind of loan is specifically promoted to those over 55 years of age, in various international markets, where they are often exempt from making monthly repayments. However, as more people needed additional income to sustain their expenses and lifestyles during the past few decades, it has increased in favor.
After the real estate market in the UAE stabilized in 2014, the home equity release market exploded, accounting for up to 25% of the country’s overall home financing market. This type of financing is well-liked for a variety of uses, including remodeling, improvements, property extensions, and real estate investing.
Applying for an equity release loan is a fairly simple process. Your preferred bank will evaluate the property to ascertain its finance-to-value (FTV). How much you can borrow will be determined by the appraisal.
The Benefits of Equity Release Loans in Dubai
You Can Release Your Property’s Value Without Leaving
Some people mistakenly believe that selling their home qualifies as a home equity release, but this is not the case. By releasing equity, you can release the money that is secured by your property. The lender is not allowed to evict you; you are free to occupy the property for as long as you like.
You don’t even have to move out; your house can still be included in the estate you leave to your beneficiaries. When you take out a loan against property, you have a variety of options, and a lifetime mortgage will protect a percentage of your property’s future worth for your loved ones.
Interest rates are low
Equity release allows you to borrow more money at a reduced interest rate because you’re using your property as security. Other personal loan options typically come with higher interest rates, but it’s wise to check first to make sure the loan you’re getting will benefit you.
With a loan secured by property, you also have the freedom to choose the loan’s term. In Dubai, equity release loans typically range in length from five to twenty-five years. With a longer loan term, you may have to pay less interest each month, which relieves some of the strain on your finances.
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However, it’s best to first go over the options with an impartial advisor before deciding on any loan option. By doing this, you can ensure that the loan you’re taking out is the appropriate one and that the length of your loan and the repayment options are well-balanced.
Tax-Free Cash Is Available for Any Purpose
You can use the money for any purpose you need once it has been transferred to your bank account. You don’t have to be concerned about losing a portion of the money to tax payments because the equity you release is likewise tax-free.
The tax-free money is widely used for paying off debts and/or mortgage, home enhancements, monetary security, paying for the education of offsprings or grandchildren, buying a second home as an investment in Dubai or cash flow for other business endeavors.
Best Financial Institutions that offer Equity Release
There are several additional well-known financial institutions, in addition to ADIB, that are providing equity release options for UAE citizens. These consist of:
- The ADIB (Abu Dhabi Islamic Bank) is the ideal financial institution for buyers interested in equity release out of all the financial institutions that provide mortgage solutions in the United Arab Emirates. ADIB enables future UAE homeowners to expand their real estate investment portfolio and acquire the equity necessary to build their ideal home or launch their desired business.
- Emirates NBD is one of the top government-owned banks in the UAE. It offers loans of up to AED 15 million with a loan-to-value mortgage ratio of up to 75%. Furthermore, applicants have the option of pre-approvals.
- Mashreq Private Bank is well-known throughout the UAE and offers both citizens and expatriates lending choices. These loans are also readily available to any expat resident who is self-employed or employed and has a minimum monthly income of AED 15,000. You are eligible to apply for loans up to AED 10 million.
- HSBC is yet another well-known financial company which provides mortgage choices to everyone making at least AED 15,000 per year. However, specific terms and conditions apply to the mortgages.
It makes sense that securing a loan against property has become so popular because equity release provides expats in Dubai more freedom to live their lives as they see fit.
To identify the best product for your needs given the wide range of equity release choices available, it is helpful to have an impartial expert on your side. Contact the Next Level Real Estate team to ensure you receive the best offer so you can experience the advantages of equity release for yourself. We also offer an extensive range of off plan property for sale options so you can browse through a good range of property specific to your needs.