Transferring a home loan to another person can arise in one of the many multi-colored scenarios in Dubai’s lively real estate market. Regardless of whether it’s based on personal or financial restructuring, an investment opportunity, or through various other circumstances, most homeowners and potential buyers are unfamiliar with the details of the procedure. Here, we discuss how possible it is to transfer a home loan in Dubai, what the law says, and the steps involved in the process.
Understanding Home Loans
Home loans in Dubai are generally offered by banks and other financial organizations to help homebuyers purchase their homes. Such home loans have accompanying conditions, interest, and repayment terms that the borrower is expected to follow. As time goes by, because of changes in life or other factors, some borrowers may wish to sell or pass on the mortgage to another party.
Are Home Loans Transferable?
Transferring a home loan is never easy. The possibility of transferring a mortgage to another person is usually far from reality as it depends on the lender’s policies and terms of the loan agreement originally agreed upon. Here are some issues that should be considered:
Approval by the lender
Most of the banks in Dubai have some form of prior approval before allowing the transfer of the home loan. The one that will apply for the home loan will need to qualify for the lender, which will include an assessment on creditworthiness, source of income verification, and evaluation of debt-to-income assessments. The original applicant should also be released from any obligation under the loan.
Loan Assumption
Some lenders will permit a loan assumption; meaning the assumption borrower will inherit an existing mortgage term. This could be a pretty good process, depending on prevailing current interest rates. However, the lender will still want to review the new borrower’s financial profile.
Release Clause
The first check would be whether the underlying original loan document has a release clause to spare the original borrower from liability after the transfer of the loan. If the clause were not there, then the original borrower could be liable for the loan even after the transfer, and if the new borrower defaults, there is liability.
Legal Aspects
Legal aspects form a part of the transfer of home loans. Some of the most significant considerations are as follows:
Documentations
Every party must sign all documents that transfer. This includes a loan assumption application, identification, financial statements, and any other documentation the lender may require. The involvement of a lawyer who is well-versed in laws about real estate in Dubai can effectively ensure that all the documentation will be appropriately handled.
Charges and Commissions
Transfer of a home loan may incur fees, which include the administration fee, the lawyer’s fee, and sometimes early redemption charges. It is best to check in the original loan contract all charges that will apply.
Notarisation and Registration
However, once the lender accepts the transfer, the change must then be notarized and registered with the Dubai Land Department to ensure that the new borrower is recognized as the lawful owner of the property as well as the mortgage.
How to Transfer a Home Loan
If you are planning to transfer a home loan in Dubai, here’s how you can do it:
Review the Loan Agreement
Begin with the original loan document. Check if there are provisions for transferring, assumption, or whether the loan has conditions set on transference.
Contact Lender
Contact your lender and provide them with your intention to transfer. Request their specific requirements concerning documentation and eligibility for the new borrower.
Analyze New Borrower's Financial Profile
Ensure that the one who is supposed to borrow passes the lender’s evaluation for all the factors put in place. Most of these include income, and credit score among other determining their financial stability.
Obtain all Documents in place
Prepare and be ready with all other documents. Among these are;
- Loan application form
- Income and employment evidence for the new borrower
- Passport documents and Emirates ID document
- Any other document that which the lender asks for
Submit the Application
Once all the documents are in order, apply for approval by the lender. Be prepared to wait a little while for such procedures.
Reading the Terms and Conditions
The transfer will be accepted by the lender if the latter is willing. On reading through the terms and conditions, both parties should understand their rights and obligations.
Final Transfer
After approval, it will be fully notarized and registered with the Dubai Land Department. This is the last step that finalizes the transfer and updates the property record.
Conclusion
Home mortgage transfer to another person in Dubai is possible under certain conditions but is always a consideration and planning that has to be made. The issue of lender approval, necessary legal documentation, and possibly fees would imply such conditions making the need for good communication and understanding among parties imperative.
In case you are planning to take the route, a consultancy with legal and financial professionals would give you insight and an easier transition. In case you are selling your property or transferring your financial obligations, such knowledge would guide you through the real estate landscape confidently in Dubai.