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The UAE Central Bank has issued a new directive under which banks can no longer charge a 3% early settlement fee for borrowers who wish to exit their mortgage early.
Banks will instead need to reduce the early settlement fee to a maximum of 1% on the outstanding mortgage amount or AED 10,000, whichever is lower.
Further, borrowers who have already paid the 3% settlement fee can get the refund from their banks within 30 days, according to the circular.
“Early settlement or partial settlement fee for applying to home loans has been reverted to maximum 1% of the outstanding balance or AED 10,000, whichever is less. Banks and finance companies that arbitrarily changed the stated terms of the fees in existing customer agreements are required to respect the original terms of the agreement and refund all overcharges for all customers based on their original fee within 30 days of this notice,” the circular said.
The move is a positive for borrowers who can now change their mortgage to lenders offering better interest rates, resulting in significant savings.
Cavendish Maxwell is the MENA region’s leading firm of property consultants and chartered surveyors. If you are looking for professional real estate consultation or advice on property related matters, please view our services.
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Sarah-Jane Carter
BA (Hons) DipM
Head of Marketing
Sarah-Jane joined Cavendish Maxwell in January 2020 as Head of Marketing and is responsible for the development of the marketing strategy and execution across the Middle East region. An energetic and results driven marketer, Sarah-Jane possesses a wealth of multi-channel marketing experience, within both B2B and B2C environments which she has gained over a 25 year career. Prior to joining Cavendish Maxwell, Sarah-Jane held senior marketing positions for major developers in Dubai including Emaar, Dubai Properties and Dubai Sports City. She also worked for IWG as the Regional Marketing Director responsible for the MEA and APAC regions. Before relocating to the UAE in 2005, Sarah-Jane held various management roles in public and private sector companies in the UK including ten years at Royal Mail and seven years at the Bank of America.
Sarah-Jane is a member of the Chartered Institute of Marketing and has a BA(Hons) Degree in Business and Marketing
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