Nowadays, the UAE has become a popular destination for ex-pats, especially in business-friendly areas like Dubai and Abu Dhabi. The market of mortgage insurance in the UAE is now growing, with local and international lenders offering home loans to ex-pats. Due to this trend of expats in the UAE. For foreign nationals living in the UAE, both residential and buy-to-let mortgages are available with different criteria.

Are you an expat in UAE?

If you do not know about mortgage insurance, it’s too late to know about it. We can help you with that.

In the UAE market, it is progressively growing and becoming mainstream. Mortgage insurance is to ensures a mortgage credit settlement. In the event of a mortgage non-refundable and catastrophic event such as the death of the owner.

There are two sorts of mortgage disaster protection plans, the first one is Private Mortgage Insurance. And the other is Mortgage Insurance Premium.

Mortgage Insurance Premium provides additional security. And that ensures the bank if the borrower doesn’t pay the sum on account of some terrible event. This type of extra security item is generally a government insurance item. 

Private Mortgage Insurance provides life coverage, and that is intended to shield the borrower from the bank on the off chance.

Like all insurance, it has several terms and conditions. So you need professional advice to start insurance. 

Mortgage Insurance 

Mortgage insurance makes secures a mortgage lender if the borrower passes away, defaults on payments. Or is otherwise unable to fulfill contractual obligations of the mortgage.

Nowadays, most people apply for a home loan if they need money. To get the approval of a loan one of the major requirements is property insurance. And insurance on the mortgage itself, to cover any eventualities.

It is better to accept advice from mortgage brokers or your own financial adviser before making any commitments. In these terms and conditions are a risky thing.

Choose a bank that has a dedicated team of mortgage advisers and professionals so they can advise and guide you based on your needs. The bank that you select must be able to provide online access for monitoring your statements.

Banks that offer competitive options, such as the extension of term, pre-payments, and sensitive handling of foreclosure proceedings, will help for your best.

Choose an insurance company only after examining the reviews of customers. Go for an insurance company that has the best claim paying record. Now all the information is available on websites. You can also ask about this from the local authorities or the insurance regulators.

Important facts of mortgage insurance in UAE

There are three facts about mortgage insurance that you should know. Those are as follows;

  1. Standard Rate

All banks have a system with an insurance provider for a Group Insurance Policy. And demanding a standard rate of premium on the mortgage amount.

The rate is depending on the provider, and it varies from 0.30% to 0.60%.

  1. Underwriting

Individual underwriting is not done for Group Mortgage insurance if the loan amount is less than 5.00 million AED.

And therefore, the same percentage of premium is charged for all mortgagors of that bank without considering the age, health, and nationality.  

Also no consideration in if a person is a male or female, and smoker or non-smoker. This will be a favor for an older person or a person with health issues. At the same time, this may be a disadvantage for young and or healthy individuals.

For example, if an expat avails a mortgage of AED 3,000,000, he may have to pay an amount of AED 12,000 as an insurance premium.

If a person avails of individual mortgage insurance such as a Decreasing Term Assurance. He will have to pay AED 3496.20 as a premium for 25 years of a mortgage. I.e. the premium on Individual Mortgage Insurance is 70% cheaper than Group Mortgage Insurance.

  1. Critical Illness Cover

Some banks include permanent disability cover, and some banks for the group mortgages covering death. But they do not cover critical illness.

The difficulty of severe sickness is higher in comparison to death and disability. At the same time for all these conditions, the impact on the person’s income is much similar.

For example, if a mortgagor is diagnosed with a severe disease like cancer. It certainly leads to loss of income because of the high cost of treatments. And also income stagnates due to inability to go to work or pursue his business.

When income stagnates for a mortgagor, it will be difficult to make mortgage payments at the correct time.

If his insurance covers critical illness as well. He has to pay a certain lump sum to pay off his mortgage or to manage the monthly mortgage instalments.

This will be beneficial for a mortgagor because he can concentrate on his recovery instead of worrying about his payments of the mortgage.

Critical illness cover at an additional premium is involved in Decreasing Term Insurance Plan from Zurich, FPI, and Salama, and also they include up to 35 illnesses to cover.

When a critical illness is diagnosed, the claim is paid, thereby can protect the property investment of the borrower.


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