Credit where credit's due

Though the expression of the day is still 'global downturn', the property market in Abu Dhabi is nonetheless alive and well. With a host of freehold projects on the verge of completion, buyers who were previously reluctant to take the property plunge are now eager to kiss their landlords goodbye and jump on the real estate bandwagon. Unfortunately, many are finding that credit is not as readily available these days as it once was.

"We were really interested in buying a place but absolutely no one will lend us a single penny," laments Susan Van Hoogstraten of Abu Dhabi. "We've tried all the banks and none of them would even consider us."
Enter the newest player in the capital's lending game, Abu Dhabi Finance.

Abu Dhabi Commercial Bank, Aldar, Mubadala Development Company, Sorouh Real Estate, PJSC, and the Tourism Development & Investment Company (TDIC) recently joined forces to form the UAE's newest finance company, with the aim of providing mortgages to home buyers in the capital.

These shareholders, who have a vested interest in seeing buyers find the funds they need, include companies which are estimated to represent more than two-thirds of the new units being built in Abu Dhabi. "Abu Dhabi Finance will provide liquidity to a market where demand remains high for property," says Ali Eid Al Muhairi, chairman of Abu Dhabi Finance.

Abu Dhabi Finance

So what's the difference between Abu Dhabi Finance and the existing banks? One is the range of customers it can serve. While various banks in Abu Dhabi have been assigned to handle the lending needs of different developers, Abu Dhabi Finance has the freedom to lend to buyers looking at more than one developer.

"A key difference between Abu Dhabi Finance and banks providing mortgages is Abu Dhabi Finance's specialism and its focus on service rather than sales," says Philip Ward, chief executive officer of Abu Dhabi Finance. "To that end, we have invested heavily in the quality of its people. Each employee was handpicked from the cream of the local and international talent pool, carefully selected for their in-depth understanding of the mortgage market, as well as their knowledge of personal finance and the real estate industry in the UAE."

Without a doubt, good service is the greatest benefit for buyers looking to borrow from Abu Dhabi Finance. "Our clients benefit from a second-to-none client service where each mortgage applicant is assigned a mortgage companion who will be a single point of contact to guide him through every step of the post-application mortgage process and thereafter," says Philip.

With the help of your own personal client ambassador, the product development team at Abu Dhabi Finance can create a mortgage to suit your personal needs, as well as catering to the needs of a wide range of applicants with different personal circumstances.

This personal service gives clients the benefit of a tailor-made package without the associated premiums – benefits such as financing for up to 85% of the property value, loan terms of between three and 30 years, flexible repayment methods, and debt service ratios of up
to 55%.

The options

As with any foray into real estate, buyers should look closely at what's on offer. Abu Dhabi Finance's essence mortgage, for example, is a variable rate mortgage for residential property but does not currently cover the purchase of commercial property.

Although it provides a high level of flexibility tailored to fit a wide variety of budgets, buyers should be aware that a variable rate mortgage is one where the interest rate varies to reflect market conditions. Considering the highs and lows of global market conditions these days, buyers should carefully consider just how much flexibility their budgets can handle before signing on.

There are several lending options available at Abu Dhabi Finance. For properties that are still under construction, buyers may consider the interest-only mortgage or the interest roll-up. The latter is a useful option for those hoping to avoid paying rent and a mortgage while their property is still under construction. During the period of interest roll-up, you make no actual payments. Instead the interest is rolled-up until the final stage payment has been made to the developer.

At this time, the rolled-up interest can be paid in one lump sum or added to your mortgage loan. This option is only available, however, if the under-construction phase is less than three years from the date of first disbursement to completion. Once your property is completed, you can choose the interest-only loan, the part and part loan, or the capital repayment loan. As the organisation grows, other products will be added.

Abu Dhabi Finance will provide mortgages to both UAE nationals and expatriate UAE residents. However, "in terms of the properties we provide, mortgages in Abu Dhabi, with initial mortgage deals agreed for developments by Aldar, Sorouh, and TDIC," explains Philip. "Abu Dhabi Finance will extend its product range to cover other developers in Abu Dhabi and over time, it expects to offer mortgages to other emirates."

As Susan points out, now is the time to find a bargain. "Flats on Reem Island that were selling for Dh1.9 million are now going for a lot less, not to mention those villas in Al Reef which should be finished within the year. We just want the chance to put our money towards our own property rather than rent."
If you're hoping to take advantage of the recent dip in prices, Abu Dhabi Finance may be your way in.
For details on Abu Dhabi Finance, go to www.adfmediacentre.com.