If you’re new to the region or simply exploring mortgage options for the first time, some of the bank jargon used by bankers, mortgage advisors and real estate agents can be confusing. Here are a few classic banking words which we have translated for your better understanding:

1. LTV – Loan to Value, this is the percentage of loan amount against the value of the property.
2. FTV – Funds to Value is the Islamic finance term used instead of LTV
3. DSR (Debt Service Ratio) – is the percentage of guaranteed monthly income which is used to pay monthly loan, mortgage and credit card repayments. Maximum level is 50% under UAE Central Bank regulations.
4. Buy-out – As the word suggests, this is when a bank or lender buys out an existing mortgage from another bank (moving your mortgage from bank A to B).
5. Stress Test Rate – This is the rate banks use to calculate affordability for a new mortgage. This rate is usually 2-4% higher than the actual mortgage rate offered by a bank. The higher stress test rate is designed to protect the borrower and the bank in case interest rates increase in future. It is used to ensure that the borrower is not over-stretching and can afford the loan repayments at the higher rate.
6. Pre- Approval – This is issued by the bank or lender to an applicant, once the former is satisfied the consumer is credit-worthy. A Pre-Approval is not a guarantee of finance but a firm indication that the bank is prepared to sanction a mortgage for the applicant. Pre-Approvals are generally valid for 30-90 days.
7. FOL (Final Offer Letter) – is the binding terms, conditions and contract between the bank and the borrower. This letter is issued after the property has been evaluated.
8. DLD – Dubai Land Department
9. Registration Trustee Office – The place where real estate transactions in Dubai are completed.
10. Oqood – This is the term used for pre-registration of a property at DLD before Title Deed is issued. Oqood is normally applied for by developers for under construction property, before completion.
11. NOC (No Objection Certificate) – this is a letter or certificate issued to a seller of a property (by the developer), confirming all dues are paid on the property and no objection to the sale.
12. CPV (Contact Point Verification) – is a process completed by a bank representative in the underwriting process of a mortgage application. CPV can be conducted by telephone call, email or field visit. This is a due diligence process taken by the bank where they will contact the mortgage applicant, a nominated reference or the employer to verify the identity, employment or aspects of the mortgage application details provided.
13. Evaluation/Valuation – All banks and lenders insist on a third party evaluation/valuation is conducted on most property purchases. The applicant pays AED2,500 to AED3,000 for an independent surveyor (not the bank) to visit the property and prepare a report. This is used by the bank to ensure that the property is worth what the applicant is purchasing it for and has a bearing on the loan offered.
14. ESF (Early Settlement Fee) – a penalty charged by a bank for partial early repayment or settlement of a mortgage loan. Under UAE Central Bank regulations, this is capped at 1% of the amount repaid, maximum AED10,000.
15. Buy-out Fee – a penalty charged by a bank for FULL early repayment or settlement of a mortgage loan. Under UAE Central Bank regulations, this is capped at 1% of the amount repaid, maximum AED10,000.
16. RERA (Real Estate Regulatory Authority) – the regulator of real estate activity in UAE

See also:

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