Guide to rescheduling your Mortgage
Success! The application process is complete, the loan’s been disbursed, and you are the proud owner of a property. Think you’re done? Well, not yet because there are a number of options you can now avail with your mortgage. Please note that all options are subject to eligibility and may include fees and charges.
Make a partial settlement
If, for example, you’ve got a bonus recently or saved up a lump sum, you might decide you want to make a ‘partial settlement’. Partial settlements are extra payments you make on top of your existing monthly payments. This will give you two options:
- It will allow you to reduce the term of the loan, keeping your monthly payments the same, but allowing you to pay less total interest.
- Alternatively, you can lower the principal amount of the loan and thereby lowering your subsequent monthly payments, keeping the term of the loan same.
Get an equity release/top-up
Making regular payments on your loan will allow you to build up equity in your home. For example, if you’ve bought a property worth AED 1.5mn and have already paid off AED 500,000 that means you’ve built up AED 500,000 worth of equity. You can also build equity if your property increases in value through market forces.
As a result, you can take out another loan worth up to AED 500,000 as an equity release, which you can use for your own purposes (consolidate your loans, pay off an unexpected expense). Alternatively, you can take out a top-up which is additional borrowing on your existing mortgage.
Get a second mortgage
It’s been a few years. You’re paying off your first mortgage, you’re earning more money, and you’ve accumulated a nice sum of money. That might mean a second property, which means a second mortgage. Second properties are subject to LTV restrictions with a minimum down-payment of 35% of the property value. Please refer to our LTV eligibility table on our product pages for more information.
You should know that all these options are subject to eligibility and approval. The better a borrower you are, the more options you have. So make your payments on time, show that you don’t have many liabilities, and it shouldn’t be too hard to avail these options.
Get a payment holiday
Are finances a little tight? Then it might help to defer your payment for a month. If you’ve been making all your previous payments, then it should be a simple process, again, subject to approval.
Extend/reduce your mortgage tenor
Increasing the tenor of your mortgage will allow you to decrease the monthly repayments. However, you should know that you’ll be paying more total interest over the life of the loan.
This is subject to the maximum age limit for the mortgage. For example, if the maximum age is 65, someone who is 55 will not be able to take a mortgage longer than 10 years. Conversely, you can reduce the mortgage term which may increase monthly payments, but will decrease the total interest you will pay on the loan. This is subject to affordability and approval.
Add/remove secondary borrower
You’d like to ease the burden on your mortgage, and your spouse/parent/uncle/cousin is ready to help. No problem! You can add a secondary borrower to your mortgage, who will help repay the monthly instalments. In addition, they may allow you to qualify for an increased loan amount. Conversely, if circumstances dictate, you can remove a borrower.