Sheikh Zayed Housing Program: New instructions issued by UAE Central Bank

All banks and finance businesses doing business in the UAE have received a notice from the Central Bank of the UAE (CBUAE) about home loans given to recipients of the Home Finance of the Sheikh Zayed Housing Program (SZHP).

In accordance with SZHP and in accordance with Article (5) of the Regulations Regarding Mortgage Loans, released in 2013, the notice included information about the CBUAE judgement.

In accordance with the aforementioned decision, the maximum debt burden ratio that beneficiaries of the SZHP's Home Finance Program may have is now 60%. Previously, this ratio was 50% of their total salary or any other income from a known specific source. The judgement further stipulated that UAE nationals with long-term loans will be given the option to apply for SZHP housing loans after demonstrating their ability to pay within the DBR cap of 60%.

After determining their ability to repay, up to a maximum DBR of 50%, and after obtaining from them a no-objection statement to increase the monthly deductions against the housing loan, banks are permitted to raise the DBR for retirees and senior UAE nationals from 30% to 50% so they can benefit from SZHP housing loans.

In addition, the Federal Government has decided to relax the rule requiring SZHP house loan customers to put down 15% of the whole cost of housing loans for which their profit and interest are guaranteed. The first property of the UAE national, which will be constructed or acquired with funding, will serve as his principal residence.

The UAE national will be required to pay the difference in the payable ratio of the down payment of 15% required by the regulations, from his own resources and not from other lending sources, should the loan amount exceed the amount of loan profit/interest of which the Federal Government guarantees and pays.

In light of the new federal government housing loan policy that the Cabinet approved to provide financing for housing loans in collaboration with the private sector and national banks, the CBUAE is keen to support the UAE government's efforts to achieve happiness, housing stability, and provide comfort and well-being for its citizens. This will shorten the time that housing applications must wait.

The CBUAE's Mortgage Loans Regulation strives to protect consumers and the financial industry by establishing minimum acceptable requirements for mortgage collaterals. By using appropriate and cutting-edge rules, it also strives to encourage financial stability and contribute to the market for mortgage loans in the United Arab Emirates' sound development and organisation.

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