For residents and investors in Dubai’s flourishing real estate market, a Dubai mortgage provides a practical means of finance to fund a property purchase in the emirate. Mortgages have emerged as a popular choice for individuals seeking to purchase homes or high-profile investments, offering competitive rates of interest and flexible repayment plans, among other benefits. The mortgage system is a key driver of Dubai’s real estate industry. Mortgages are meant for the long term, but sometimes life happens, and we need to get out. Wondering what you can do in such a situation? Read on as we explore the procedure for seeking mortgage termination in Dubai.
Reasons why Mortgage Cancellation is important
Why get a mortgage canceled? Reasons include:
Clear Ownership: Once the mortgage is canceled, the owner of the property receives clear ownership of the property with no encumbrance. This is important for determining the sale price of a property or to refinance or transfer the property to the estate heirs.
Financial Freedom: Paying off a mortgage eliminates the ongoing financial obligation associated with it. This can free up capital that the owner previously used to pay off a mortgage, which the homeowner can invest in something else, save for retirement or pay for other financial goals.
Creditworthiness: A mortgage cancellation can benefit someone’s creditworthiness. This shows fiscal responsibility and the ability to handle debt, which could increase credit scores and result in better rates for loans down the line.
Risk Reduction: By eliminating a mortgage, the homeowner reduces foreclosure risk due to default. This eliminates the risk of losing the property to foreclosure.
Canceling a mortgage is an important milestone in a homeowner’s financial journey that brings a sense of accomplishment, freedom, and an increase in financial flexibility.
Options for Canceling a Mortgage Deed
If you’ve paid off your mortgage or want to remove the lien for other reasons, you have multiple ways to cancel the mortgage deed:
Automatic Cancellation
A mortgage deed usually requires renewal every 12 years. The deed self-cancels if the payment is not made. But one must clear pending dues with the mortgagee to prevent legal ramifications.
Release Deed
One more way is to get a release deed. This applies if you have paid off your mortgage in full and want to terminate the existing deed. It makes sure that there are no outstanding dues and enables the authorized owner to take possession of the property. In case the mortgagee is dead, his/her legal heirs can get the release deed by producing a death certificate and NOC.
Cancellation Deed
A cancellation deed is the safest way to end a mortgage. Hire a lawyer to prepare this deed as he will prepare the deed mentioning the details of the original mortgage deed, the reasons for cancellation, and the NOC issued by the lender. For it to be valid, it must be signed on a legally valid stamp paper of sufficient value.
How to Terminate Mortgage in Dubai?
Foreigners who intend to stay in Dubai for an extended period tend to purchase mortgaged properties. If things change and they plan to return, they will have to apply for a mortgage termination in Dubai. The reasons for termination may vary, but the process is the same.
Dubai Land Department (DLD) is the governing body that oversees the real estate market of the Emirate. DLD also presides over the process of mortgage termination. The first step in the procedure to cancel the mortgage in Dubai is to collect the documents.
Documents Needed to Cancel Mortgage in Dubai
There are two methods to submit Termination. When applying online through the bank, you would need your Emirates ID For those applying through the Real Estate Registration Trustees offices, the Emirates ID card and the letter from the bank for mortgage termination is required.
Mortgage Termination Request Procedure
An individual can electronically file the request to the bank or directly visit any of the real estate trustees’ offices. The service typically lasts 20 – 25 minutes. Continue reading to discover the entire mortgage termination process.
Steps to apply for Mortgage Termination in Dubai via Bank
Follow the steps to arrange—go to the bank and submit documents. Through DLD Document Vault, a bank staff will enter all the details into the e-mortgage system. Then, the bank auditor will go through an audit procedure, and then the transaction will be sent to DLD for review. The bank’s fees are debited for DLD’s fees. An email is sent to the applicant with the final outcome of the termination process.
Dubai Service Centre Process For Mortgage Cancellation
Approach a Real Estate Trustees’ office to apply for termination. They would first have to submit the documents to an employee. The next step once your data has been entered and verified is that the applicant must pay the mortgage termination in Dubai fees. Email is used to send the application’s final result. At the end of this entire process, the applicant gets the Letter of mortgage termination, title deed, and balance fees.
How much is the fee for terminating a mortgage in Dubai?
This is the fee you must pay for termination.
- Mortgage removal: AED 1,000
- Issuing a Certificate of Title / Title deed: AED 250
- Knowledge fee: AED 10
- Innovation fee: AED 10
- Service partners fee: AED 300 +VAT
Here are some Mortgage Termination in Dubai payment methods:
- Epay
- Sadad Dubai platform
- Noqodi
In the instance of Manager’s check, it must be in favor of the Land Department
Penalty For Not Canceling A Mortgage Correctly
Ongoing Liability: If a mortgage is improperly canceled, the borrower may continue to be liable for the debt despite its repayment. This may result in legal ramifications and potentially considerable financial liabilities.
Title to the property: Lenders need to have the mortgage released, or the title to the property will remain clouded by the mortgage lien. It can cause confusion about ownership rights and hinder any future transactions involving the property.
Mobility Complexity: This can be a significant issue for a prospective buyer or transferee if the mortgage status of the property is murky. This may delay selling or transferring ownership and may reduce the property’s value.
Foreclosure Risk: If a mortgage is not properly canceled, it can create a foreclosure risk in extreme cases, even after the loan is fully paid off. As a consequence, the property and considerable financial penalties may be imposed on the owner.
Effect Of Mortgage Cancellation Failure on Property Ownership
When a mortgage is properly canceled, the title to the property is clear of encumbrances. This ensures clarity of ownership rights and allows property to be transferred smoothly during transactions.
Increased Marketability: A property with a clear title is more appealing for prospective buyers or transferees, as it reduces the risks and uncertainties regarding its rights and interests. This can help in making the property more marketable and may lead to an increase in its value.
Elimination of Financial Commitments: Terminating a mortgage liberates the property holder from all future financial commitments linked to the loan, offering them financial independence and security goals.
Wrapping Up!
The termination of a mortgage in Dubai is a significant indication of your approaching full property ownership, which can be accomplished successfully with our service. It is important to note that you need to follow the right procedures, such as settling your outstanding loan, getting a clearance letter from your bank, submitting the required documents to the Dubai Land Department, and so on, before you can successfully close your mortgage. This not only removes the bank’s claim on your property but also gives you legal ownership. Keeping a well-organized game plan and nabbing professional advice when necessary could also avoid delays. To conclude, ending your mortgage correctly ensures the financial door closes behind you properly and secures the privacy of your property while protecting your rights, as you should be with such a valuable piece of land.
