Mortgages still easier to come by on the Palm than elsewhere

Mortgages may not be freely available any longer, but that should not necessarily put off any buyer seriously interested in acquiring a home on the Palm. Of course, this does come with conditions.

The borrower will have to pay a fairly substantial down payment as well as demonstrate his repayment abilities and credit history. If he does so, several banks are still willing to finance an acquisition on the Palm as the master developer, Nakheel, is very much on
the approved list.

Even then, banks that are lending have a self-imposed ceiling of between Dh7 million and Dh10 million, which would render a mortgage out of bounds for, say, a Signature Villa, now carrying a tag of almost Dh13 million. While that may be the case, “It is probably easier to find a mortgage for a Palm property than it is for many other developments,” says  Chris Dommett, CEO of John Charcol, an independent mortgage brokerage firm.

With banks directing all their attention to verifying buyers’ creditworthiness, Dommett reckons it is best for end-users to secure a mortgage pre-approval before approaching real estate agents and sellers. This will prepare customers for any disappointment should the desired transaction fail to come through. “This will also show both the agent and potential sellers that you are serious and can complete the purchase,” Dommett emphasises. “It will allow you to decide how much you can spend as well.”

But are lenders willing to sign up for any overseas interest in Palm properties? “There are still two or three lenders who will consider non-resident borrowers. So although the credit criteria are strict and the interest rates generally high, it is possible for them to find a mortgage if they can demonstrate good repayment ability,” adds Dommett.

However, with bargains abounding in the overseas housing market and risk appetite on the wane, latent interest in the Palm from overseas buyers is  still unclear.

Paul Sharland, the sales development director at Luxury Homes, says the Palm will always have that iconic status, and this coupled with the sea views will mean it will always be popular. Russians, Iranians and Indians are particularly drawn to the Palm.
“Many of these clients buying on the Palm live ‘inland’, thus very rarely get a chance to have a sea view and making it a ‘must have’ when searching for a property. I am confident that properties with a sea view in particular and water view properties will prove to be a very good medium to long term investment, and at this point in time, there is a window of opportunity to buy at attractive prices.”

As for those who already have mortgages on their Palm investments, the present is an opportune moment to modify their contractual terms. This can take the form of a lower interest rate, a lower monthly payment or a loan that is spread over a longer period.

“Increasingly, people are looking to move from lenders with very high interest rates to those offering rates of up to three per cent less,” Dommett says.