DIB set to unveil home loan plan

The home finance market is hotting up, with Dubai Islamic Bank (DIB) preparing to come out with the first Islamic finance package to buy homes in Emaar Properties.

According to sources in DIB, the bank is finalising the package with Emaar and will launch the scheme, which will finance up to 80 per cent of the cost of a property, within a week.

DIB's package will be for a maximum of 20 years. According to bank officials, the rate will be competitive compared to similar schemes offered by conventional financial institutions.

Though it was Amlak, Emaar's mortgage arm, which first anno-unced a long-term loan scheme for properties offered by Emaar, many banks are also said to have made plans to offer mortgage against properties in the wake of Emaar and The Palm's moves to offer freehold ownership even to expatriates.

The most significant development that gave the timely push to the property market was the assurance from Emaar that visas of expatriates who buy Emaar properties will be renewed automatically. All these resulted in heavy booking for Emaar homes.

The DIB move to launch specific finance packages for Emaar properties will help meet demand from buyers who insist on Sharia-compliant mortgage packages.

The Palm project had offered a 25-year mortgage facility against its properties with the cooperation of National Bank of Dubai.

A few banks have started reaching out to prospective buyers of properties at these two projects where freehold ownership has been allowed.

"This is a rare opportunity for banks, which are liquid with funds, to lend to expatriates against collateral, which has not been available hitherto,'' said Arif Lakhani, chief executive officer of Habib Bank AG Zurich.

The rates offered by banks are understood to be around two per cent over Eibor with a minimum rate of six per cent.

However, it is yet to be confirmed whether banks can go in for long-term loans of 25 years, unless specific approval is obtained from the UAE Central Bank.