- June 1, 2021
- Posted by: Sarbavoum Bidhar
- Categories: Financial Services, home loan repay, Mortgage Debt Management
Most people take a mortgage loan with the intent of paying it off fully and taking possession of their property. However, there are scenarios when the repayment of a mortgage loan becomes difficult. For example, COVID-19 has caused many job losses, and expatriates have no option but to leave the country. Many people want to know is it possible to leave the UAE with an unpaid mortgage. This blog addresses this question and discusses ways in which borrowers can deal with this situation.
Actions Banks can Take against Defaulters
Here are the things banks can do against those leaving the UAE with unpaid mortgage dues.
Legal Action and Travel Ban
If a borrower has missed mortgage payments, the bank can take legal action against them. They can also request for a travel ban on the borrower. This would mean borrowers can be detained at the airport if they are leaving with unpaid debt.
Initiating Legal Proceedings to Recover Dues from Home Country
Alternatively, if the borrower manages to leave the UAE with missed mortgage payments, it can make lenders doubt their intentions. The bank will initiate legal action against the borrower. This can be tough for borrowers in countries like India, which have a legal treaty with the UAE to deal with such defaults. Any judgment passed in the UAE against defaulters is enforceable in India. Moreover, the creditor can access the creditors’ assets in India to recover their dues.
Options Available with Borrowers
Here are the things borrowers can do to deal with this situation.
Keeping the Property as Buy-to-Let
Buy-to-let stands for buying a property and renting it out. You can leave the UAE if you keep the property as buy-to-let. Ultimately, lenders are interested in their mortgage payments. If the rental income received from the property is adequate to make timely mortgage repayments, lenders will not have a problem with you leaving the UAE.
Convincing them of Your Ability to Repay
It is normal for the bank to ask for full and final settlement of loans from borrowers leaving the country permanently. However, there are instances where borrowers can convince the banks of their ability to repay even after leaving the country. Borrowers need to show adequate proof of income from other sources. Rental income, as seen earlier, is one example of proof of income. If you have other sources of income in your home country, which sound convincing to the bank, you can leave the UAE with an unpaid mortgage.
Negotiating a Debt Resolution Program
Finally, borrowers can negotiate a debt resolution program with their bank. As part of bank debt restructuring, they can agree upon a repayment plan with the bank. The best practice is to settle all debts before leaving the UAE. However, if you had to leave the UAE with unpaid debt, you can negotiate a bank debt restructuring program even from overseas.
FREED Can Help
Leaving the country with an unpaid mortgage can be an unpleasant situation both for the borrower and for the bank. As a borrower, your priority will be to safeguard yourself against legal trouble. You also need to worry about your property. Most borrowers have invested substantial amounts of money in a mortgaged property, and they would not want that money to get wasted.
FREED has helped hundreds of borrowers facing similar situations with innovative bank debt restructuring solutions.