After greetings,

The Central Bank would like to clarify the following points regarding Central Bank)s Regulations concerning personal loans and mortgage loans:
 

1. 1- Notice No. 4501/2011 dated 07/07/2011 provided banks and finance companies an option, back then, to separate residential real estate loans from personal loans availed by UAE nationals, with the overall installments not to exceed 50% limit along with other repayments in accordance with the Regulations. This has become clear-cut with the issuance of Regulations regarding Mortgage Loans on 28/10/2013.
    
2. 2- As per the definitions mentioned in the Regulations regarding Mortgage Loans, Mortgage Loan is defined as a loan that is collateralized against a residential property granted for the purpose of constructing, purchasing or renovating a house for owner occupier or investment purposes. It also includes loans granted for the purchase or the development of land for these purposes.
    
3. 3- Under Article (3) of the Regulations regarding Mortgage Loans, the maximum DBR allowed is set out in “Regulations Regarding Bank Loans and Other Services Offered to Individual Customers”- i.e. 50 percent of gross salary and any regular income from a defined and specific source at any time.
4.  
5. 4- Notice No. 4501/2011 dated 07/07/2011 also gives the banks an option to restructure/reschedule personal loans, which their total repayment burden exceeds 50% of gross salary/regular income, for longer than 48 months provided no fresh funds are made available to the borrower. Therefore, the purpose is to bring down the DBR to 50% and less without any additional finances.
6.  
7. 5- Central Bank's requirements to buyout and transfer loans from other banks are mentioned in Notice No. 13/1187/2013 dated 06/08/2013 (copy enclosed).

Therefore, banks and finance companies must stop marketing or offering any products that are not in line with Central Bank's Regulations and the above clarifications.