5-step process to restructure Mortgage Debt in the UAE

  • May 26, 2020
  • Posted by: Minhaj Mehmood
  • Category: Mortgage Debt Management
44 Comments
5-step process to restructure Mortgage Debt in the UAE

Unforeseen circumstances can completely derail your financial plans and even affect your ability to repay Mortgage payments on time. As time passes, this Mortgage with its interests and penalties can turn into a monstrous sum. One of the best things to do in these situations is not to run and hide. It’s otherwise, you need to go ahead and ask your bank for a Debt Restructuring.

What is Debt Restructuring?

It’s a legal way in which you can alter the terms of your Mortgage contract to repay your outstanding Debt obligations. Based on your financial situation and repayment track record, banks can provide you relief with an extended timeline, lower-interest-rate or step-up option for your Mortgage Debt.

The 5-step process for Debt Restructuring

  1. Before you plan to talk to your bank, you will have to create a summary of your current financial situation. It should include all outgoing expenses and other debts including credit cards and personal loans. Follow a total transparency protocol.
  2. Next step should be keeping an account of your current expenditure including personal living expenses, education expenses, medical etc to help the bank realise that you will fall short of paying the monthly instalment amount on your Mortgage.
  3. The restructuring evaluation will be based on total household income including the rental income of the property and spouse income. Ensure you have all the proofs available when discussing with the bank.
  4. Continue to make payments to the bank even at the reduced sum which will go a long way to display your intent to pay despite the reduced ability.
  5. Approach the bank with all the paperwork and data you have collected to figure out a repayment strategy. Be persistent in your approach by providing all relevant information and data required by the bank.
  1. Before you plan to talk to your bank, you will have to create a summary of your current financial situation. It should include all outgoing expenses and other debts including credit cards and personal loans. Follow a total transparency protocol.
  2. Next step should be keeping an account of your current expenditure including personal living expenses, education expenses, medical etc to help the bank realise that you will fall short of paying the monthly instalment amount on your Mortgage.
  3. The restructuring evaluation will be based on total household income including the rental income of the property and spouse income. Ensure you have all the proofs available when discussing with the bank.
  4. Continue to make payments to the bank even at the reduced sum which will go a long way to display your intent to pay despite the reduced ability.
  5. Approach the bank with all the paperwork and data you have collected to figure out a repayment strategy. Be persistent in your approach by providing all relevant information and data required by the bank.

Factors that can affect your chances?

There is no single plan that fits every Mortgage borrower for restructuring. The chance of receiving it depends on many factors such as:

  • Your credit history that measures your ability to pay the Mortgage before you faced a financial crisis
  • Even though the UAE banks have scrapped the 70-years upper age limit for borrowers, your age and capacity to work will play a role in the bank’s decision
  • The market value of the property will play a critical role. If the property value covers the current loan outstanding the bank can demand foreclosure of the loan rather than a restructuring of the loan
  • If you are married, you will also have to submit the financial record of your spouse to provide complete transparency.

Depending on these factors and more, banks can reduce the interest rate of the loan, increase the loan tenure, provide a payment holiday or reschedule the interest and principal payments.

How can FREED Financial Services help?

Doing things on your own can be pretty daunting and might not yield a favourable result. We specialise exclusively in Mortgage Debt Management and have the expertise and experience to help you find the right solution. Our key affiliations with banks will ensure you are represented in the best way possible from start to finish until you receive a favourable repayment option.

We will:

Analyse your financial situation

Represent you at the bank

Negotiate with the bank

Get a favourable Mortgage Debt Restructuring plan

Write to us with your details at inf[email protected] and get a free consultation call today

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