Ten questions to ask your mortgage advisor

Before you sign your home application forms, make sure to ask your mortgage advisor important questions.

Buying a property, of course, goes hand in hand with mortgage finding, but before you add your signature to your home application forms, make sure to ask your mortgage advisor the following 10 important questions.

. Did you do a review of the entire market? Are there any better deals available?
. Why is this bank charging an upfront fee of one per cent?
. Are there any hidden costs?
. Why is this bank insisting on a salary transfer?
. What are the negative points of having a mortgage that requires a salary transfer?
. Can I choose my own life insurance provider?
. What happens if I want to break the loan?
. What happens if I want to leave the UAE?
. What happens once the fixed period expires?
. Can I make additional payments? Is there a limit or are there any fees involved?

Compare the market
Remember that the mortgage with the lowest advertised interest rate could end up being the most expensive. In more mature mortgage markets such as in Australia and the UK, advertising regulations stipulate that banks and mortgage providers must quote both the annual interest plus an annual comparison rate that takes into account all establishment fees, break fees, initial and ongoing interest rates and charges over the course of the loan so consumers can compare the real total cost. The UAE does not yet have such regulations but at the least make sure your mortgage advisor outlines two to three options suitable for you that clearly outline the following:

. interest rate
. application fees
. establishment fees
. valuation fees
. revision rate
. extra payment fees
. break fees if you want to sell
. break fees if you want to refinance with another bank
. life insurance costs

Salary transfer
A loan that requires a salary transfer could suddenly become hugely expensive should your employment circumstances change. Should you lose your job, some lenders will hold your end of service gratuity until you are able to provide them with a new employment visa. And should you leave the country, they may keep it and switch you to a more expensive non-resident interest rate. In most circumstances, it is advisable to avoid mortgages that require a salary transfer.

Life insurance
Life insurance policies and fees vary massively between lenders in the UAE. Make sure you understand the cost of life insurance, whether or not you can choose your own life insurance policy and whether or not your non-working spouse also needs to be covered.

Break costs
UAE Central Bank regulations stipulate a maximum loan break cost of one per cent of the loan amount capped at Dh10,000 but your bank may charge more during the fixed period. Make sure you understand the implications if you want to sell or if you want to refinance with another mortgage provider.

Additional repayments
Most lenders allow you to make additional repayments. Most will allow at least 20 per cent of the outstanding loan amount per year without charge.

Bank processing fees
The bank will often charge a fee to establish your loan. This can be up to one per cent of the loan amount, sometimes higher and sometimes zero. If pushed hard, occasionally lenders will reduce this fee for strong applicants.

The writer is CCO of propertyfinder Group. Views expressed are his own and do not reflect the newspaper's policy.