Ladies and gentlemen, please take your seats.
The show is about to begin. Mohammed, let's put on a show.
All right. Welcome to another episode of
Golden Nuggets with me, your host Sylvia Eldawi.
And today I'm joined by Muhammad Kaswani, who is the Vice
President of Property Finder and the Managing Director of
Mortgage Finder. Welcome to the show.
Thank you for having me, Sylvia. You're welcome.
We are going to talk about all things mortgages today.
I've got lots of questions and the audience have questions too.
So we're going to we're going to go to their question.
I need to find out what they are actually.
So because I I gave them, usually what I do is I do it the
night before. I say I've got Mohammed Kaswani
on the show. Drop all your questions about
mortgages. But I did it 10 minutes before
you came in. So I'm sure there's some
questions which we'll review now.
Mohammed, I learnt something the other day about mortgages.
Do you know the origin of the word mortgage?
I sure do, and it's not pretty. Tell us what's, tell us about
it. So I think it's a it's a death
pledge. Yeah, exactly that.
So it comes from the French mort, which is death, and Gage,
which is pledge, and it's from the 14th century.
So it is kind of like a negative connotation on like a death
contract. So do we blame the French for
everything that's wrong with mortgages?
Let's do it. Let's do it.
Everybody else blames the Brits, right So.
Let's blame the French for this one, OK?
And you actually started your career.
You're quite the entrepreneur, but you started your career a
while back in mortgages. Yep, that was more about 22
years ago. As, as our good friend Drake
said, started from the bottom. Now we're here.
Now he's here right at the top and Mortgage Finder is one of
the is it the number one mortgage broker in the UAE?
We're we're the market leading mortgage provider with direct to
consumer lending. OK.
So that's that's where we are. Clear.
That's the that's the the accolade.
Now tell us about your journey from being a starting at the
bottom to now being here. Oh wow, so you know, I, I grew
up in I grew up in Damascus area, went to the US in my late
teens, early 20s, went school in in Pennsylvania, chased the girl
out West, worked at Bank of America and then started my own
mortgage company in 2000 did. You marry that.
Girl, I did marry that girl. I no longer married her, but we
have two beautiful children together and they, they all live
in California and I go visit them every now and then.
So sorry for another day. So then I started my own
mortgage company back in San Jose, CA exactly 20 years ago,
so around October 2004, and then sold it and moved back to the
Middle East in March 2008. So that was seven months before
the market crashed. So when you're, I was in my very
early 30s and at the time, you know, I obviously, I, I decided
to wind down the business late 2007 and completely exited early
2008. So when I was, you know, back in
the region in, in 2000, you know, late 2008, looking what's
happening in the world of financial crisis, I actually
believed I was a genius because I was, you know, young.
You exited. At the right time.
And you know, you're, you're often too full of yourself when
you're that young. So I'm like, I'm so smart, but
did you? Have like a clue that something
was coming or. Truth be told, you had to have
been an idiot not to see a crash coming pre financial crisis,
particularly if you were in the mortgage industry.
I, you know, I, I take a lot of pride in having, you know, built
and ran a super clean shop at the time.
But we knew what was happening around.
We were talking to the bankers. We were, you know, interacting
with other brokers etcetera and it was definitely a train crash
waiting to happen. But you know, we avoided that.
Like I, I do talk a lot about the financial on my guests
because my guests are always have been in the industry for a
considerable amount of time. We always do reference 2008 as
that turning point and we talk about the global financial
crash, but a lot of people might not understand how or why it
happened. Could you just give us like the
101 on Fannie Mac and Hanie Mae or what was it?
Freddie Mac. And Freddie Mac and Annie Mae.
Whatever. Look, I think if I was to use
one word, it would be greed, right?
And greed in the sense that customer centricity or having an
industry, right, that focuses on what is in the best interest of
the home buyer. And usually home buyers are the
most delicate and they usually fall, you know, prey to, you
know, some greedy people in different industries, whether in
banking and, and real estate, financial services, etcetera.
And a lot of people were rushing into buying homes without having
the, you know, the, the proper financial foundation, you know,
to, to, to do so. There's a lot of malpractice in
that industry. And, and, you know, particularly
in the US in the US, mortgages are usually originated by
brokers and banks are more than 1200 thousands of mortgage
originators, 10s of thousands of mortgage originators, in fact.
And then it's packaged and sold in the secondary market.
So let's say a bank originates 1000 mortgages and then they
turn them into mortgage-backed securities and then they sell
them in in packages of let's say 100 million.
What happened was very simple at the time, people were buying
homes that were beyond their means.
Their interest rates started adjusting, particularly with the
exotic loans at the time. And then, you know, the music
stopped, you know, demand turn around, mortgage payments
started adjusting. So affordability wasn't there.
People were forced to sell their homes.
And there were a lot of companies as well.
I remember there were a lot of companies that were betting on
people defaulting. I can't remember what that was
called. But yeah, credit default swaps,
I think, or yeah, it was, I mean, look, it's, it's how we
evolve as a, as a species, as a human being, you would hope.
And I think there's a lot of safeguards that are in place in
the financial services industry, both, you know, in the US and
Europe here and, and globally. So here in the UAE, Central Bank
is always very committed to maintaining lending standards
that ultimately protects home buyers from from making bad
decisions or poor financial choices.
And that definitely safeguards our market.
And what would you say, I mean, I know that was 20 odd years
ago, but is there any significant differences between
getting a mortgage here and getting a mortgage in the US?
Here's the unfiltered truth. I think the mortgage industry
here is 20 years behind what the mortgage industry was 20 years
ago when I was in it in the US. So it's 40 years behind
technically. Unfortunately, yes.
And let me let me quantify what I mean by behind right.
The the transaction cycle is extremely slow.
It is a painful, daunting journey right now.
I remember back then in, in the 2004 to two 2007 eight, we were
originating mortgages in within 48 to 72 hours, right?
The average transaction cycle in the UAE is 48 to 78 to 272 days,
right? So that's 24 times slower,
right? And, and look, this is the, the
sort of the trade off between central bank being, you know,
hyper committed to maintaining that conservative approach to
mortgage lending, ultimately to protect home buyers and protect
the consumers and put all of these safeguards in industry.
But it also comes at the expense of, you know, very inefficient
processes, right? And I can dive into these
processes and the pain that, you know, home buyers would, would
go through. Now we go through this pain on
behalf of home buyers and mortgage finders.
So we we, we understand it very, very well and we try to sort of
shield home buyers from that pain, but we know what's
happening in the background. Yeah, because my friend just
took out a mortgage recently and she was like, I had no idea how
painful just that part of the process was before she's even
started viewing properties and and making offers.
It was like that was a pain. Sender to us next time, it'll be
a lot less pain. OK, so this episode I really
want this to form AI mean a lot of people are actually using
these episodes as training programs or, you know, instead
of CEO doing a Monday meeting, they'll just play one of these
episodes. So I really want this to be a
useful episode for someone either who has just got into
real estate or is in the the very beginning does has never
actually taken out their own mortgage.
So I really want to fill in a lot of the blanks for them on
that and also tenants, tenants moving into or considering home
ownership. And one product that you have on
on your website is that rent versus buy calculator.
Can you tell us about that? Yeah, absolutely.
So it was a tool that we developed on the back of my own
personal experience. Couple of years ago, I was doing
some math deciding whether to continue renting or to buy a
property. Luckily we bought and but the
process was on an Excel sheet. So I started plugging in some
numbers, running different scenarios.
What happens if the property price goes up?
What happens if interest rate adjusts?
What happens with various different scenarios of that, you
know, that can happen in a property transaction?
And on the back of that, we, you know, sat with the product team
and I said, hey guys, how can we build this tool to empower
consumers or home buyers in making that decision
objectively? So we built a tool that is
called the rent versus buy calculator.
You can find it under explore, so you can just go to Google,
type property Finder, run versus buy calculator and you'll find
the link just to give you a bit of a shortcut.
What we found in almost absolute terms is the one variable that
makes the difference is how long you plan on staying in the
property. And we advise home buyers
accordingly. You know, we say, hey, if
you're, you know, if you're getting into the property with
the view of potentially moving or selling in a year or two,
maybe you're better off renting. Because of the upfront costs
involved. Yes, right.
And I don't like to look at appreciation.
A lot of times people I believe make a mistake of treating a
property purchase like a trade, right.
It's not a trade. It's a the most important thing.
It's your home, particularly if you're buying to live, right?
The second most important thing is it's an investment.
It's an investment in your family's future.
Now, in almost absolute terms, if you're living in the property
for three to five years or longer, it is always better to
buy than rent. Now, that's an almost keyword,
almost absolute terms to double click on today's market
dynamics, right? And the reason why the rent
versus buy calculator will almost always come on the side
or encourage you to buy is because in today's market, and
this is unique to the UAE, your mortgage rates are lower than
rental yields. So if you look at rental yields,
that is annual rent divided by the property divided by property
value, it's in a range of 6 to 7% gross yield.
Mortgage rates are close to 4%. Nowhere in the world has those
dynamics. You go to the US, your rental
yield is more like 4%, depends on where in the US obviously,
but let's say major cities and then your mortgage rates are 7,
seven and a half percent where we are right now in in mid 2024.
So that dynamic is making it a lot more financially viable to
buy as opposed to rent. Yeah.
And the only thing that could put anyone off and let's be
honest, because you have another product the the monthly payment
calculator, I think it's called mortgage.
Mortgage calculator, yeah. That so you think, OK, in my
head I'm like, oh, 20% deposit, my upfront cost, But then when
you Add all the plus plus plus, it ends up being double the
amount of your deposit after you factor in agent fees, after you
factor in the transfer fee, surveyor's fees.
All of that makes you want to go back to the Rent search button.
So yes and no, right? Because some banks, in fact most
banks today, allow you to include DLD registration and a
real estate agency Commission, let's say transaction fees allow
you to include them in the mortgage.
Yeah, I saw that at the bottom, there's a toggle at the bottom
include the fees. So that's.
Look, I always say to people, if you know it is it's ultimately a
financial decision, you can include them, you know, or or
you can choose not to again at rates as low as 4%.
And remember, our rates are lower than the majority of, of,
of of markets, particularly western markets.
I think it makes sense because you're borrowing money cheap.
Not as cheap as it used to be. Look, it isn't right, but let's
face it, you know, one 2% interest rates, that's not
normal, right? It was, it was never, that
wasn't cheap. That was abnormally low.
For a long time. For a long time I know.
And, and we got spoiled when we get used to it.
And, and you know, look, funny enough, a couple of years ago,
almost everybody was speculating that with interest rates going
up, the, the music is going to stop or home buying activity is
going to slow down. And, and, and I, you know, we go
through this chart with, with our team on a monthly basis and
it's, it's mind boggling. You see it, you see the dynamics
differently. So for example, in the US, the
curve moves in the opposite direction.
So interest rates go up, mortgage activity goes down in
here, they're moving in the same direction.
Why? Because of rents.
You know, again, rents went crazy the last couple of years.
They've in in some areas they've more than doubled.
I know I'm, I'm, I'm in that. I'm in that mix.
OK. And in terms of the split now,
would you say it's 5050 cash and mortgage purchases?
What are you getting there? It's closer to like it's, it's
in the 40 something percent on ready properties, so.
A mortgage. Our mortgage.
OK, fine. So just to kind of understand a
bit about how to calculate it, let's say before you get to the
calculator state, in fact, no before that, and I know the
answer to this, but from a technical perspective.
But your advice you start shopping first or get pre
approval first. Always get a pre approval first,
always get AI mean look for a couple of reasons.
One is I think it gives the home buyer more credibility when
they're engaging and interacting with real estate agents and
potential property sellers, right?
Because they will ask that question.
Everybody will ask that question.
Two, as I also think it, it gives home buyers that more
responsible approach because particularly when you're buying
a home to live in, as much as it's an investment or a
financial decision, it is an emotional process, right?
And what you don't want to see is people going out shopping for
homes, finding the home of their dream and then stretching
themselves in every possible direction and borrowing money
from, you know, aunts and uncles and brothers and sisters and
friends to make that down payment or, or, or to make that
transaction happen. And then going through
financial, financial stress. Now you will find it quite
often. And this is important to always
advise home buyers is particularly first time home
buyers. It's almost not normal not to
have some level of stress, financial stress, when you buy
your first property. That's OK.
But don't take, you know, too high of a burden to a point
where you're putting yourself at risk.
Especially if you lose your job or in those kind of scenarios.
OK, so let's say before you get your pre approval, there are
some calculations that you can do yourself.
So there's a few rules of thumb when it comes to how much can I
or how much should I borrow. And I would say it's about 25%
of your monthly income should go towards your rent or your
mortgage. Am I right on that?
It depends on your other liabilities.
So if we were to go by central bank rules, right, Central bank
rules says all of your liabilities.
So that is your mortgage, your car payment, your credit cards.
Keep in mind on credit cards it's not how much you owe, it's
what your credit line is, right? Right.
Your personal loans, etcetera, all of which should not exceed
more than 50% of your monthly income.
OK. Now so.
So they want you to have 50% of your salary put away each month?
It's not put away, right? It's your disposable income is
going to go to, you know, putting gas in your car, paying
utilities, you know, paying service charges for your
apartment, if you own an apartment or even a villa,
school fees. Want to talk about this?
Yeah, that can be expensive. Yeah, OK.
Because there was another calculator that I had seven
times. You should buy a property that's
seven years worth of salary. Yes, or less than seven years.
Worth of your salary, yeah, don't exceed 7X your annual
salary. So that's a nice kind of.
I mean, look, there are all kinds of formulas.
You know, ultimately it is a, it is a, a matter of personal
choice. Some people do make that choice.
We made that choice as a family to say, you know, look, we
wanted a property that is fit for purpose.
And, you know, we did a remodel and, you know, went all out and
that was very, very important to us.
So, yeah, it wasn't, it was tight, right?
You know, again, different people have different
personalities. Some people cannot, simply
cannot live with any level of financial anxiety.
So they choose to go more conservative, live within their
means. I admire them.
I think, you know, that's always the more prudent approach.
But different people have, you know, different personalities.
But you know, I love playing around with the Mortgage
calculator. And what's quite interesting is
the the difference between no, if you're adding one million, if
you're going up a notch, 1,000,000, it's only an extra
4000 dirhams a month on your repayment.
That's it. That could be two nights out at
Zuma that you no longer go to. You know, you scrap that off
your list and then instead you buy a property that's a million
dirhams more. Or it could be a pair of shoes.
Quite frankly, it's a pair of designer shoes every month that
you sacrifice in order to live in a property that's a million
dirhams more expensive. 100%, 100%.
So look, I mean, and, and again, the, the Mortgage calculator is
a is a great guide to show you, but again, you want to keep in
mind some scenarios, right? You want to look at what are
your other liabilities? And then also keep in mind that,
believe it or not, some people look at it simplistically in
saying my mortgage cost versus my rental cost as a monthly
payment. But remember, part of that
mortgage is going to to your principal.
So it's it's forced savings, right?
Right. OK.
And then the other. Even if you what I'm saying is
even in in a world where your mortgage payment is slightly
higher than your than your rent, but you're living in a property
that you love and that you see yourself committing to for the
next week. So I'd almost, I'd rather see
somebody stretching themselves a little bit and live in the
property longer as opposed to going on the, you know, going on
the conservative side and then making a move in two to three
years because that move is more expensive and more risky.
Because when you take a long term view on a property, you
know, appreciation, depreciation, all of that
becomes a lot less of a, of a concern.
Because look, we've all, we all know every market in the world,
whether that be the UAE, France, Spain, England, US, etcetera.
You know, it's the nature of any, you know, any market, you
go through economic cycles, you're going to have ups and
downs. We've seen ups and downs, you
and I within the industry, we've seen a couple of cycles, you
know, of the, the market going up 20304050 seventy, 100% and
then going back down and then going back up.
So. And it's, and it's interesting
because it is, there's a name for it.
I think it's like lifestyle upgrade or something.
Once you do stretch yourself a little bit.
And I actually had one of my, you know, one of my early day
bosses, he used to encourage all the brokers to go out and get an
expensive Mercedes on finance, go and buy a property.
Not that he was pushing us into debt, but he wanted us, he
encouraged us to stretch ourselves financially so that
then our, you know, income had to keep, keep pace and obviously
we'd close more deals or make more money and and so on to kind
of keep up the lifestyle. So I completely agree with them.
So one of my really good friend and mentor is a high profile
figure in the private equity space.
One of his profound advice, he's an older gentleman, mid 60s.
And one of his profound advice to me is has well, always live
beyond your means because it keeps you going.
Now again, when you have a family and you have a, you know,
wife and kids, you know, husband, parents, etcetera, you
always want to make sure that your family is is protected.
So. Don't be irresponsible, OK?
And then the other thing to bear in mind is the length.
So let's talk about mortgage typical length.
So the standard is about 25 years, but if you're over 45,
they'll cap it at 65 when you turn 65 that they'd only give
you a 20 year. And, and this is one of the, the
debates that we always have with, we're trying to have with
the, with the bankers and ultimately, I think a debate
that should be had with had with, with central bankers.
Why the 65 year old age gap, right?
Let's face it, if I'm 50 years old and I'm, you know, I'm
borrowing for a 30 year term, not even 25, right?
Well, let's say 25 year term and I'm, you know, I'm now 65, then
I would have already paid more, paid down more than half my
mortgage. So the risk to the bank is
almost non existent. But it is that it is what it is
and that is the rules. So the rules here are your
mortgage term is capped by either maximum of 25 years or
age 65. However, there are unspoken of
exceptions depending on the borrower's profile and the bank
and the borrower's income and etcetera, etcetera, where we can
stretch that tenure up to 70 years old.
So you can be 50 years old and have a 20 year mortgage as
opposed to only 50. I'm surprised they don't ask for
medicals and stuff or they don't look at health.
Do they or do they? Do they sneak into the?
No. So there's a life insurance
policy and I would say it's one of my favorite documents to sign
on a mortgage. I told my wife when when I did
it, I said, hey, I just realized I'm gonna be, you know, I'm
worth a lot more dead than alive.
Don't give her any ideas. She listens to a lot of those
podcasts which you know, the, the, the crime and disappear
people podcasts. Sometimes I.
Red flag. Yeah, yeah.
But yeah. And hopefully we're not giving
her any bad ideas. 25 years. 2560.
Five, Yeah. So life insurance yes, with with
life insurance you sign a medical declaration form where
you declare any pre-existing conditions and etcetera.
I always urge people to be factual.
There is always the case that nobody thinks about, you know
of, God forbid you know, the the mortgage holder is deceased and
then the insurance company can always find a reason to say, oh
you had a pre-existing condition.
So if you do have pre-existing conditions, I always urge people
to declare them. My mine is the smoking box so I
mean I'd love your opinion on this but I used to smoke
cigarettes. Now I've switched to Icos which
I don't consider smoking so I think I would tick the
non-smoker box. Well, you know what ICOS stands
for? No, it actually stands for I
Quit Ordinary Smoking. I did not know.
Did you all know that? They're all like, did you?
I did not know that. OK.
Maybe that answers your question.
So if they need another box that says not ordinary.
Smoking Are you an ordinary smoker or are you an
extraordinary? I'm an extraordinary everything
you. Are extraordinary.
So yeah, we both know. It thank you.
Thank you. Right.
OK. So we've done the length of the
term bank versus broker because your default is the easiest
thing for me to do is use the bank that I bank with.
They're offering me a mortgage. Let me go with them.
It's easier to just be in house. Why should I go to a mortgage?
What a broker? What's the pros and cons of
each? What's more important, buying a
pair of shoes or buying a house? You're asking the wrong person.
You're asking the wrong person I love.
Can you say they're equally important?
Look, as long as I have somewhere to live and I have
nice shoes, I'm happy. Look, if you're looking to buy a
nice pair of shoes, do you go into one store or do you go, are
you better off going into three or four different stores?
Good point. I tend to go to a mall where
there's multiple brands or concessions within the
department store. I mean, look, there's always a
world where you say, you know, I want to buy a lupoutine or
whatever, right? But, but there's a world where
you wake up one day and you say, Hey, I need some emotional
support and I want to go to the mall and buy a nice pair of
shoes, right? I do this sometimes.
I'm sure you do now, but you don't really know what kind of
shoes they want to buy or let's say a watch or whatever that is.
So you're always better off shopping around and and seeing
what other options you have now. Jokes aside, your mortgage and
your property purchase is often the most important decision that
you make after marriage. Agreed.
With that said, you go to the
bank, you're going to get one option and the bank is going to
sell you on their mortgage product.
You go to a broker or a mortgage provider, an independent
mortgage provider, and then you have every bank in the country
at your disposal as opposed to only one.
So your advice of course. I would always go definitely
advise to go to a trusted mortgage broker and a trusted
mortgage broker is ask your friends, right?
Check out Google reviews, you know, ask your agent for a
recommendation. Maybe you know, always, you
know, definitely make sure that you're working with somebody
trusted. If you can ask for references.
Like I said, check for Google reviews.
They always tell you a lot. If you don't find positive
Google reviews, maybe that's an alarming sign.
Or just ask for references. Yeah.
And there is another reason not to go with your bank because if
you do switch employment, there's a, you know, that end of
settlement or not, end of settlement, end of service that
triggers, you know, red flags for the banks.
So we, we usually tell this to each and every single borrow
what we get and, and we clarify that we get a lot of borrowers
who end up getting a mortgage through their bank, but through
US, right, because we manage the process on their behalf and it's
better they get the same terms. So let's say you bank with ADIB
or FAB or Ms. MB D, right? You can come to mortgage Finder,
we can get you the mortgage through your bank and we'll get
you the same terms. Just frankly speaking, better
service right now. We always advise people to say
even if you go through your bank, don't go for the salary
transfer option. It's it usually comes at a
lower, at a lower interest rate. But then the issue that you're
having is if you feel that there's a risk of you exiting
your role, then you know what either the risk that you're
taking is. The bank will then hold your end
of service amount as soon as you as soon as you exit.
So it could be a bit of kind of financial complication.
OK, Speaking of financial complication, credit scores, how
how do I find out my credit score?
What can I do if there was something on there that I didn't
know about? Like is how often things being
discovered in the credit score that people had no clue about.
Yeah, funny enough, we get a lot of cases where people get have
credit cards that they didn't know existed, right.
So somebody who had gone for a car loan and part of the, you
know, as they're signing the documents, the bank offered them
a credit card and they checked. Yes.
And then it shows as a credit line on the credit report.
Yeah, anybody can pull their own credit report using AECB.
So, and it had credit Bureau AECB.
Just look it up on Google. And then they also have an app
where you can download it, put your Emirates ID and your
information and then you get your credit report.
So it's not just the credit score, it's a full report that
shows your, you know, payment history and what your credit
lines are with different financial providers.
So is it good to have credit cards that you don't use?
Does that improve your credit score?
Because that in certainly in the UK we were encouraged to take
out credit cards but not use them or make sure we repaid them
every month in full because that gives you a bit of a boost or is
that not really apply here? No, look, I mean it's all within
a balance, right? So yeah, definitely having a
couple of credit cards with regular usage, what's very
important is paying it off off on time or maintaining a low
balance to credit line ratio. That's for a couple of reasons.
One is financial responsibility because credit card interest
rates are borderline criminal. You know, if you add it up for
the year, it's higher double digits.
It's very, very expensive. So you don't want to be paying
credit card interest or profits. It's very, very high.
Two is, again, in a world where you're adding that financial
stress onto yourself and in a world where you're forced to pay
down your credit cards, you don't want to have that
financial stress always. I really justly tell people the
one thing to watch out for the most is maintaining credit card
debt to a minimum. OK And what about your like
utility bills and stuff? Because I've there have been
times where I've forgotten about an AC bill or paid my due exile
up late. Does that have a?
Sadly, yes. How many days late?
It was so more than 30 days is what?
Oh no, that's not. It's more of a kind of reminder,
like oh damn I forgot to. And, and like, the nice thing
about over here is if you're, you know, like I've been with
the salad for how long? 1213 years now.
They they call me on the day that my bill is due.
It's not like a day, but a day after.
It's like, hey, you know your bill, dude.
Have I ever missed a payment? No like.
I don't get a phone call, I just get the text message saying it's
oh maybe I clicked don't call me.
Maybe I should do that? Yeah, so and with the apps and
everything, but in the in the UK it's much, much easier because
everything is on a standing order.
You will not forget it. It just comes out automatically.
Here I have to manually have like a bill day where I'm just
going to go in and pay everything.
But yeah, OK, so I want to get your opinion on what makes
sense. And this is your personal
opinion. It's not to be construed as
financial advice. But let's say you've got a
million Dirham's cash. Would you be recommending
someone buy a million Dirham property outright or mortgaging
5 apartments, putting the OR mortgaging as many apartments
and and putting that money down as a deposit?
Are you buying to live or are you buying to invest investment?
So it's not that simple, right? Because you don't always
mortgage. So your mortgage on your primary
residence, the 20% down payment applies.
If it's an investment property, you need to have a higher down
payment. 40%. And, and again, I always say
look for you want to, you want to be in a world where your
rental income is or your, your mortgages, your, your mortgage
and service charges, etcetera is less than 80% of your rental
income. There's a couple of, there's a
couple of formulas that you want to apply into making these
decisions properly. So it may not be 5 properties,
it may be three properties, it may be 4 properties.
The short answer is, again, with in a world where rental yields
are higher than mortgage interest rates, then yes, all
day long mortgaging and investment property is better
than buying it cash. But that make sure that you have
that balance and, and the reason you want to do this because you
want to account for, you know, vacancy, you want to account
for, you know, God forbid something happening in the
property. You know you want to account for
interest rates adjusting because remember, interest rates here
are fixed for, you know, 2345 years, but then they become
adjustable. Right.
And and let's talk about that, the difference between tracker
and variable. Can you explain the differences?
Yeah, of course. So you have two options.
Usually when taking out a mortgage, you can either take a
variable or what they call a tracker.
And that is there's a, there's an index called the IBOR, which
is the Emirates Interbank offering rate.
So it's usually IBOR plus a margin of let's say you know, 1
1/2 or 2%. That's option A Option B is and
that's adjustable from day one. So whatever happens to the IBOR,
you just add 2% and then it moves up and down.
Sometimes people do this when they speculate that interest
rates are going down. Option two is to take on a fixed
term mortgage that is often fixed for.
The most common product here is three years, so fixed for three
years and then it turns into a tracker at the end of that
three. Year and you're either going off
a Cliff or climbing up a hill, Yeah.
So we're getting, I mean
naturally now a very big portion of our business is mortgages
that we had originated in 2000 in 20/21/22 that are now coming
back for a refinance. OK.
And let's talk about refi as they call it, refinance or
switching mortgages or something else that is quite common in the
UKI don't know if it happens much here.
Is releasing equity to buy another property does that?
Is that a thing here? Absolutely.
You can release equity either to buy another property or to
renovate your property, right? You renovate your home now with
home renovation. Some banks, they simply send you
the money straight to your account and then you manage a
renovation. Other banks mandate that they
only send that money directly to the contractor.
Interesting. But again, and that's the,
that's one of the benefits of working with a, with a mortgage
provider because you can then have these options when you go
straight to your bank, you're, you're usually bound by whatever
rules your bank has. So those are usually the two
common ways for, for remortgaging.
The third one is you can simply remortgage without taking an
equity release just to fix your rate for another longer term.
Now it's been extremely common because think about what
happened the last couple of years.
Property prices appreciated big time, right?
And. Unexpectedly.
I, I think expectedly you think I absolutely, you know,
absolutely. After the C word, everyone
thought it was going to be an absolute disaster.
Maybe not everyone, but. Look, I've, I've, I've said this
quite often, I don't advise people to bet against Dubai,
right? This that you know, it's a city
with an incredible regulatory environment, with leadership
that knows what they're doing, with a, with almost an, an
obsession to, you know, advancing and being the best of
the best anywhere in the world. You know, you look around you,
you've got a great environment. I wouldn't bet against the city
right now. The reason why I don't say it,
it is expected or I, you know, it has been expected is and
people aren't really paying attention to this.
You're looking at property values and absolute value as
opposed to looking at it in inflation adjusted value,
because if you look at property price levels today, adjusted for
inflation, they're actually less expensive than where they were
in 2015. Sixteen.
So yeah. OK, I like that.
Don't bet against Dubai. OK, self-employed people and
freelancers. How did the mortgage options
differ if you're self-employed or if you're an agent that's
Commission only, or you're a, you know, freelancer of some
sort? Most banks will either not lend
you or put you through hell and back.
We can show you vouchers, right? We but that's again, not all
banks. That's most conventional banks.
That is we're working with. This is, I think, particularly
for somebody who's a freelancer, real estate agent or
self-employed or non resident. This is particularly the case
where I would advise them to go to a mortgage broker because
then they would save you the time and trouble and drama of
going to one bank at a time and getting rejected.
We, our team, would know which banks would lend you at what
terms ahead of time and they'll help guide you properly.
OK. And what about employment
probationary periods? Like how, how, how does that
affect mortgage eligibility? You've just started a new job,
or you've just arrived in the city.
Yeah, you're always, you need to apply after you've passed
probation, OK. Again, there are some exceptions
of banks who would lend you while on probation.
It is extremely uncommon, OK. And look, part of it is also, I
think being financially responsible.
If you're facing the risk of not passing probation for whatever
reason, do you really want to take on a mortgage liability?
Because it is a liability. Well, you could actually request
that if that's your intention to buy a property, you could
negotiate your probationary period is reduced from six
months to three months. Perhaps there's there's that to
think about. All right, What happens at the
end of the 25 years? Because I'm approaching that
stage on some of my properties where I'm like, hold on a
second. That's amazing.
Time is coming. Yeah, did.
You buy your first like this. You bought your first property
when you were two. 1007 and. You were 12.
No, I was, Yeah. Yeah, I was 12.
I was 12. They gave you a mortgage when
you were 12 years old. Unbelievable, these Annie Mac
and Freddie Mae crooks. And actually my first mortgage
was 100% mortgage where they just gave you the whole amount.
You didn't have to have any down payment or anything, no.
The real answer to your questions I don't know.
Just because I had interest only, so that was an interest
only. So I've only paid the interest,
not the principal. So I have to just sell it at the
end, which is made a, you know, it's, it's gone up considerably,
but, but generally you're supposed to own it at the end of
the 25 years. You do own it, yes, 100 So that
we know now, if you're asking me if, if you're asking me, what's
the process? Do you get a call from the bank?
Do you call them? Does anybody come and give you a
hug and say Hallelujah? No, we don't know what happens.
I, I I don't. Know OK no one's reached the end
of the 20. Five years you will own, you
will really own your property because remember you're when you
when you buy a property through a mortgage, the mortgage is
mentioned on your title deed. So I would imagine you go down
to the trustee office and say get them removed.
I think you get, I think you get a document from your bank that
says my mortgage is paid off and or I have no liability and then
get them to remove it. So.
If anyone knows what actually happens at the end of 25 years,
if you're if you've been, you know, if you've been in a a
mortgage holder for that long, drop it in the comments.
Next generation of home buyers. I know you know, we're probably
the same generation. We always had it drilled into
US, own property owned. Property.
Yes, You look so much younger than me.
Funny how that happens, but yeah.
That's the property Finder colours, yeah.
They they they enhance my complexion.
Are you seeing any trends when it comes to the age of first
time buyers or are people waiting for longer?
Is the next generation like so done with that measure they'd
rather invest in other assets, asset classes?
Are we seeing any kind of shift since you, since you're 2020,
well the beginning of your mortgage career?
It's a very, very good question. We, we published those on a on
an annual basis with our mortgage Finder annual report.
We're definitely seeing that scale sliding younger and
younger over time. Interestingly, those dynamics
are different between one global city to another.
Keeping in mind that the UAE has we we are a young population,
so. Lots of entrepreneurship.
What applies here isn't necessarily similar to what
applies elsewhere in the world. Right, let's move on to home
buyer tips because this has all been home buyer tips
educational, but we're going to separate three sets of people.
So we're going to talk about the end users, the investor and the
real estate agents. So what do you wish the end end
users knew about mortgages? Go to a broker as a a trusted
mortgage provider or a broker as opposed to going to your bank so
you can have more options, right?
That's that's number 1/2 if your first time home buyer stretch
yourself within limits, right? So make sure that you have that
your family is secure, right. So think with your mind as well
as your heart. So it's not all emotions
definitely apply some sense Three, and this is another part
of working with a trusted mortgage provider.
Ask your mortgage provider to review the MOU and the purchase
agreement. Right There's.
A. Can they do that?
Would they do that? So our mortgage advisors always
review and it's a complementary service that we offer.
What we look for is there's, there's something and this is I
think the one advice for people to walk away with is always make
sure that there is a, a term in your MOU about valuation, right?
Because if you're, if subject to, you know, bank valuation,
because if let's say your valuation comes back and it's
20% below your purchase price, then you won't qualify for that
mortgage anymore and your transaction falls apart and you
just lost your deposit, right? So make sure absolutely that
there is that valuation clause that is advice that applies to
first time home buyers, to investors and to real estate
agents. Because the last thing a real
estate agent should want is drama halfway through the
transaction. OK.
That's superb advice. Thank you.
Valuation clause. Make sure it's there.
OK. And and if they don't have it.
They can reach out to. Go buy it.
Don't don't buy the property, go buy another property.
And there are times when the seller would refuse and we
usually advise. But again, that's the
distinction between a trusted mortgage advisor and a.
Cowboy. Thank you.
OK, you know, and and we always in in our, our team does this
incredibly well and so do many people.
I'm sure being an advisor is a very, it's a big responsibility.
You're advising people on the most important financial
decision that they're making. So I would say if you're, if
you're a mortgage broker or your real estate agent or your buyer
or your seller are pushing you against doing what is logically
correct, don't buy the property. There will always be another
property. Walk away, OK?
And yes, you know, your husband or your wife is going to tell
you, but I love this. It's a corner plot.
There'll be another corner plot. Don't worry.
Yeah. OK.
And what should investors be aware of when considering
mortgages? So always look for that balance
of making sure that your, that your mortgage payment and
service charges and, and you know, maintenance provisions,
etcetera is within that 80% of rental income range.
That's, that's absolutely important.
Watch out for those service fees, right?
And also there's so many tools on the market and, and, and
great companies like Keeper. For example, if you want to work
with a property manager, you want to assess whether you're
better off doing short term rentals or long term rentals.
What are your objectives on this property?
How important is liquidity? So for example, if you want to
be in a position to be able to sell that property on a short
notice or you know, move into the property yourself, then
short term rental becomes. Yeah.
Becomes more relevant. And lastly, I would like to hear
from you, why choose mortgage Finder to finance my next well
to broker my next mortgage? Trust is, is, is a one word and
look, this is something that we've been hyper committed to as
a, as a team and as a company with a, with a brand as large as
property Finder and mortgage Finder, maintaining trust and
taking that responsibility seriously is extremely,
extremely important. There is one metric that I as as
the MD of the business focus on. What do you think that is?
Revenue. Nope.
Retention. Nope.
Referrals. Nope.
Reviews. Google reviews.
So the one thing that I talk about most religiously is Google
reviews. I read them every single day
with my morning coffee. That's your thing.
It's, it's my thing. It's what I enjoy.
It's what we it's what we love. And that's not just about me.
You would see we have WhatsApp group with everybody on the
team. That's what everybody
celebrates. You'll hardly ever seeing
somebody saying, you know, congratulations, so and so on
closing 100 million that I have last month, that's not really a
thing. Congratulations so and so on
closing 30 transactions last quarter.
It's not a thing what you see even the team celebrating each
celebrating each other for is is is customer reviews because we
literally obsess with home buyers and and we say we even
say it on the website and we're not shy to say this.
We work for home buyers. We don't work for the banks, a
lot of real estate agencies. And we have, you know, hundreds
of real estate partners who choose to place their trust in,
in our team, a mortgage Finder. Not only because we have members
on our team who have been doing this for nearly 20 years, but
also because they know that they're referring their home
buyer to somebody that they can trust and somebody who will look
out for. Them and that's really, it's
really important because I, I always went by the saying people
respect what you inspect. So as a leader, if you are
obsessed with Google reviews, well, guess what your team are
going to be pushing for all the time?
It's those Google reviews. I'm Dan Mohammed's asking me for
another review. Where are my reviews?
No, I don't ask people, by the way, for reviews.
We just, yeah, I just celebrate them, right?
But it must then become part of the culture that people that
your people are asking for reviews because they know it
pleases you so much. Entrenched in the culture, right
And, and, and, you know, thankfully it pleases everyone.
It's no longer about just making, you know, making me feel
good. It really everybody now in the
company. It it became, I think it became
entrenched in our culture, customer centricity.
And then but the other thing that flip side of that, because
I used to obsess over reviews as well, but when you get one bad
one, what? How do you have any bad ones?
Do you ever? Everybody, everybody has a,
everybody has a bad review every now and then.
We have close to 700 reviews now and at 4.9, so obviously a lot
more five star reviews than now. Interestingly, Google reviews
often tend to be either five stars or one star.
Nobody. Ever.
Reads you four stars or three. Stars, right?
Because if somebody's taking that time to review on Google,
you know, they're either very happy or they're very unhappy.
What we do is, you know, many times, so either our head of
mortgage advisory, Sam, who I believe you may have met, or a
member of our management team will call that customer to
better understand. The first course of action is to
say, hey, we see you're unhappy, how can we take care of you?
After we've taken care of them, we then ask them, hey, if you
feel that we've taken care of you.
And look, sometimes customers, you know, sometimes they wake up
on the wrong side of the bed. Sometimes they don't know that
it was the bank who change the term halfway in between.
Ultimately, we are held responsible.
Yeah, and everybody makes mistakes.
OK, brilliant. And there is that opportunity to
give good customer service by turning around a negative review
into a +100%. That's the way that you handle
it but it. Becomes a.
It becomes a crisis. It's like a natural disaster if
there's a one star review on on Google.
OK, you're having that. You're sitting there with your
coffee and it's like what? Brilliant.
Well, Mohammed, thank you so much for sharing your expertise
and your valuable insights. I've really enjoyed that.
I've learnt a few things as well.
And yeah, I hope you enjoyed that.
If you do, like, share and subscribe.
Thank you very much. Thank you.