‘Mortgage is more complex than other loan products’

Buying a house is not as straightforward as other purchases. In fact, buying a house through mortgage can be a daunting exercise without the help of professionals. “A mortgage product, with its processes, documentation and third-party involvement, is more complex than other loan products,” explains Sonny Zulu, head of retail banking, Standard Chartered UAE. In a talk with Property Weekly, Zulu shares tips on how to avoid “surprises” when taking a mortgage.

What are your home mortgage products?

I am proud to talk about MortgageOne. MortgageOne links the current account to the home loan. The interest is calculated on the difference between the mortgage loan outstanding balance and the current account balance. With this product, homebuyers pay less interest as more of the monthly payment goes towards the principal amount than that of a traditional home loan. The interest savings may be withdrawn from their account at any time. We also have SaadiqOne, a Sharia-compliant option that links the current account and home finance, resulting in lower cost of financing and shorter finance period. The product offers complete flexibility with an option to make withdrawals.

What should one keep in mind when getting a mortgage?

The first and most important thing is to be clear on you’re looking for. If it’s for self-occupancy, individual preferences will help in the decision. If it’s for investment, consider the property price, cost of financing, rental yields, developer and likely demand for that type of property in the chosen location. Also, research the UAE real estate market, economy and different developments on offer. Homebuyers should be clear on their expected sustainable cash flow to service the mortgage. Most importantly, have a full understanding of the financial product you are applying for. Read all the terms and conditions and be aware how the cost and/or interest is charged and calculated.

What type of mortgage would you suggest to a first-time buyer?

A lot of properties have been completed in the past two years, so I suggest a ready property so they can move in or rent it out immediately. To avoid any surprises like an increase in monthly instalment as the market rate changes, go for a medium-term fixed rate product, which will give enough time to settle and recover from all the expenses like the down payment and registration fees.

What do millennial homebuyers want from their mortgage?

Millennials are digital-savvy and prefer a faster application process done online. A mortgage product, with its processes, documentation and third-party involvement, is more complex than other loan products. Millennials look for quick decisions and to be well-informed throughout the process. To encourage them to get a mortgage, banks should invest in faster, simpler and more transparent systems.

Tell us about your rent-to-own product.

Our Saadiq Home Finance is based on the Ijarah concept where the bank buys the property and leases it as a rent-to-own product. The solution is so inclusive, it is not restricted to Muslims. This has been approved by an independent Sharia Supervisory Committee, so our clients can bank worry-free, while complying with Islamic banking principles.