Mortgage broker commissions in the UAE

A mortgage broker can help make the path to property ownership so much easier. Let’s learn how mortgage brokers are paid for their services in the UAE.

What mortgage brokers do

In today’s fluctuating real estate and mortgage market in the UAE it’s crucial to understand the conditions and requirements as well as the available options on the market in order to get the best deal you can for your future home or investment. Unless you are an active member or a veteran of the real estate or mortgage industries, you will need some help navigating the complexities of the home-buying process in the UAE. When it concerns financing and home loans, this is where mortgage brokers come in very handy.

Mortgage brokers can essentially take you through the entire process from application to closing and even to the property handover. They can do the fieldwork and research for you and offer advice on how to get the best deal and return on your investment. Brokers help borrowers with the application process, documentation, and submission while leveraging their network of connections with multiple lenders to provide their clients with the best options available. They provide dedicated support and help with any issues that may arise along the way. Mortgage brokers are not employed by any particular lender so they are looking out for the client’s best interest, focusing instead on the greatest chance for approval with the best conditions and favorable rates.

This is complex and difficult work with many rules and regulations that need to be carefully considered. As such, brokers of course deserve to be compensated for that work and the following section will focus on different types of remuneration as well as the current industry standards set by the market.

How are mortgage brokers paid

Currently, there are two types of compensation that brokers in the UAE are entitled to receive for their services and two different sources those payments can come from. One type of compensation brokers can receive is a fixed fee. This fee needs to be disclosed in advance and is usually included in the contract. This fixed fee can range from 2,000 AED up to 5,000 AED, depending on the amount of work and the size of the loan. The second type of compensation is a percentage commission which usually ranges from 0.4% to 1% of the loan amount in the UAE, although it can be higher in some cases.

Both of these types of compensation can be paid either by the borrower or the lender, depending on the initial agreement between the parties involved. However, with the option for a lender-paid commission, brokers might be influenced to choose a different lender that offers them a higher commission. With the borrower-paid option, the broker will focus on finding offers with the best rates and conditions for their client. The lender that offers the highest broker commission may not always be the lender offering the best rates or lowest closing costs.

Choosing the right mortgage broker

The choice is completely up to you, the client, based on your preferences and needs, but it’s important to keep a few key aspects in mind. It would be a mistake to choose a mortgage broker solely based on their service fee. Many factors can influence the broker fee and it’s essential to focus on those most effective and useful in your particular case.If you see a higher broker fee first determine if the services they offer justify the amount. You can check for the following services and determine if they would be helpful to you before you decide. Services:

• Real estate and mortgage market research - this can help you understand what to expect regarding property prices and mortgage interest rates before you even start the process

• Process information and guidance - this can help you navigate the complex process faster and avoid any unnecessary hassle

• Dedicated customer service - this can help you keep the process moving forward should any issues arise

• Application, documentation and submission - brokers can apply for you at multiple lenders, help you prepare documentation, and submit to them in your stead

• PoA (Power of Attorney) - brokers can act and appear in your stead at contract signing, closing, registration, and even property handover

• Negotiation and best interest - brokers can negotiate better terms and purchase conditions for you while looking out for your best interests

• Real estate services - some brokers also offer in-house real estate services which can simplify your process and significantly speed up the property search

If you have a choice between brokers with a 0.4% commission and a 1% commission, examine their services carefully or simply ask them what they cover as most of the services above tend to be indispensable in the home buying process. These services can make your property purchase so much easier and more enjoyable, not to mention make a difference between loan approval and rejection. 

Next steps

Now that you have some insight into what brokers do and how they are compensated for their services, it should be a little easier to choose a good broker for your next home purchase or investment property. Once you are ready to proceed Kredium offers all of the services above, and more, for very affordable fees. If you have any questions or want more information, please contact one of our experts and we will gladly assist you.

If you are looking for a property in Dubai, browse our portal with over 5000 listings from all major UAE developers and register to get access to all property prices and floorplans. You can use our mortgage calculator to plan your monthly installments or estimate the projected rental profit of your investment property. If you need a mortgage whether you’re a UAE national, expat, or non-resident, we’ve got you covered. And if you are looking for more information about real estate and mortgages in the UAE, feel free to browse our blog section for all you need to know.
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Photo credits:

• Photo from Work Lawyers Serving California 

• Photo by freepik