What the Banks do not tell you about the Mortgage Affordability in the UAE.

The most important question that most buyers put in place when applying a mortgage in the UAE is: 

"How much can I borrow?" 

Nevertheless, there is a question to be asked which is more vital: 

"How much should I borrow?" 

Mortgage affordability does not only concern the bank eligibility. It concerns financial sustainability - and that difference can change your financial future years. 

Bank Eligibility vs. Personal Affordability. 

Banks estimate the affordability through calculated financial formulas. The following assessments are founded on: 

• Monthly income 
• Existing liabilities 
• Credit profile 
• Regulatory limits 

Provided that you fit within those parameters, then you could be approved. 

Nevertheless, the eligibility of the bank does not necessarily correlate with individual comfort. 

Even technically approved mortgage can cause a long term strain on the finances should it push your lifestyle, savings, and flexibility to the limit. 

The Unconscious Strain of Full-bore Borrowing. 

The intention amongst many buyers is to borrow as much as possible. It makes sense, optimise the purchasing power, purchase a more superior property. 

but increased borrowing usually implies: 

• Greater interest overall. 
• Less monthly financial flexibility. 
• Greater exposure to the fluctuations of rates. 
• Restrained space of investment in the future. 

Maximum eligibility borrowing can address a short run desire and bring about a long run restraint. 

Qualification is not as important as Cash Flow. 

The financial comfort you will actually have is based on: 

• Emergency savings buffer 
• Lifestyle stability 
• Career predictability 
• Future financial plans 

A mortgage must not limit life, but should allow space. 

Financial comfort can be easily challenged when unexpected circumstances such as job change, family growth or economic changes occur when repayments are already strained. 

Long-run vs Short-run Excitement. 

Purchasing a house is an emotive event. One can so easily concentrate on the dream house without thinking about the repayment scheme. 

Nevertheless, mortgage planning must emphasise on: 

• Stability over speed 
• Sustainability over size 
• Strategy over impulse 

The largest mortgage decision is not the finest one but rather the most sustainable choice. 

The Functions of Strategic Structuring. 

Affordability planning can encompass: 

• Tenure adjustment to comfort. 
• Choice of suitable rate structure. 
• Repayments made flexibly. 
• Borrowing in long-term interests. 

Such decisions determine financial security long after the date of purchase. 

Final Thoughts 

Mortgage affordability does not only happen to be a bank calculation but rather a personal financial plan. 

The actual one is not, How much the bank will give me? 

It is how much I can live comfortably, invest wisely and plan confidently.