Investors today prefer to seek investment in real estate to gain good return of investment as it is one of the emerging markets in Egypt and much more stable in comparison to its counterparts such as the gold market, stock market, and shares especially with the instability of the Egyptian pound. However, Egypt is facing a long-term housing crisis due to high prices and the huge shortage of affordable homes for the large segment of the country’s middle and low income classes. Hence, the mortgage loan idea has evolved to provide people with sufficient fund to bridge the gap between the supply and demand and solve the housing crisis in the country.
What is mortgaging?
Mortgage loans are defined as debt instrument or loans in which the obtained house is put up as collateral for the loan, wherein a purchaser who defaults on a loan is subject to having his house restored. The mortgagor is committed to pay back with a predetermined set of payments. This tool is commonly used by businessmen and individuals to make huge real estate purchases without paying the whole value of the purchase up front.
Why do people get a mortgage?
The real estate sector in Egypt is one of the leading sectors in the country and it is much more stable than its counterparts such as the gold market or saving money in the banks especially with the instability of the dollar. When people face an obstacle in the way for not getting enough money to acquire a property or invest in it, they go for the idea of the mortgage. Over a period of many years, the mortgagor repays the loan in addition to the interest until he/she gets the property clear and free.
How to get a mortgage?
Here is everything you need to know before getting your mortgage loan:
- Save a deposit, which is the amount you put towards buying your property itself.
- Decide what type of mortgage suits you best.
- Find the right lender and compare at least three of them.
- Check the current mortgage rates to get the best deal.
- You have to be registered as an employee in any of the private or governmental sectors or self-employed or engaged in any commercial activity.
- You will have to provide extra proof of your financial stability, including having a higher credit score or large cash reserves if you are a self-employed.
- The maximum amount of the granted loan is determined by the mortgagor’s income.
- The loan amount is calculated as 80% of the total value of the unit. On the other hand, touristic or commercial units are calculated as 60% of the unit’s total value.
- The unit price is determined by a real estate evaluator/ agent located in the entity in which you want to borrow when applying for mortgage.
- Submit the contract of the registered property with the documents indicating your personality, functional, and financial status on which the acceptance of the loan will be determined.
- If your income does not exceed 5,000 L.E, you will repay your mortgage loan in the form of premiums up to 40% of your monthly income while the percentage may increase up to 50% for people with higher salaries.
What are the best mortgage loan companies in Egypt?
There are various banks in Egypt specializing in finance mortgage loans such as:
Commercial International Bank – CIB, SAIB Bank, Alex Bank, Banque Misr, Al Baraka Bank, National Bank of Egypt, Arab Investment Bank, Housing & Development Bank, Egyptian Arab Land Bank, National Bank of Kuwait – NBK, and Faisal Islamic Bank.
On the other hand, there are many firms specialized in mortgage loans such as Sakan Finance, Egyptian Housing Finance Company – EHFC, Al Ahly Mortgage Finance, Tamweel Mortgage Finance, Taamir Mortgage, Amlak for Real Estate, Arab African International Mortgage Finance, Al Naeem Mortgage Finance Company, and Egyptian Mortgage Refinance Company.
Mortgage Calculator
The mortgage calculator illustrates the coast per month and the full cost over the life of the mortgage, with interest and fees.
You must enter the mortgage debt, term (duration of the mortgage loan), annual interest rate or monthly payment, fees to take out of the mortgage and add these fees to it. You should also choose the mortgage type and then calculate it. Please note that the mortgage calculator relies or certain assumptions, and thus, it is essential to get a precise quote from the lender and double check the price before acting on the information in order to avoid any mistakes.
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