The debt trap is a reality. It was evident in a recent Standard Chartered survey published in UAE’s leading newspaper in December 2020. [MK1] In the survey, millennials (aged 25-44) were asked what they would do if the government gave them Dh 5,000 without any obligations. An overwhelming 45% of respondents said they would use the money to pay off debt or cover living expenses. Nearly 34% of the millennials said their borrowings have increased over the past month.

Undoubtedly, the COVID-19 pandemic has unexpectedly saddled many people with debt. According to a recent survey by Standard Chartered, managing money became challenging for 74% of people in the UAE since the COVID-19 outbreak. Notably, things became difficult for millennials (aged 25 to 44), with 78% struggling with money management issues.

Being in debt is not a pleasant situation. In particular, job losses or pay cuts caused by COVID-19 has made things more difficult for households. However, everyone should aspire to become debt-free. While it may look complicated, it is not impossible.

Just like every other country, the COVID-19 pandemic hit jobs and incomes of people in the UAE. Estimates by Oxford economists suggest the UAE could lose 900,000 jobs due to the COVID-19 pandemic. According to an October 2019 survey by recruitment firm Robert Half,[MK1], more than 50% of the UAE’s population was earning less than their regular income.

Let’s face it – with the rising inflation and cost of living, it’s not unusual to find oneself in a debt trap. Unforeseen circumstances like a salary cuts, job loss, delayed receivables, can make it even more challenging for borrowers to manage their big-ticket debts such as a Home Loan. According to a survey, three out of every five UAE residents are debt laden.

The unforeseen circumstance like the pandemic has made a treacherous impact on the financial planning. The drop-in income due to delayed receivables, reduced salaries, job losses, rental yield has created a cash crunch situation.

The Covid-19 pandemic has had a devastating impact on the economy, derailing many of our financial plans as well as the ability to pay home loans. The situation has become even more challenging due to drop in property values, rental yield, the salary cuts, loss of jobs, as well as income losses for the businesses. The long-term effect related to Mortgage Debt is beginning to be damaging.

When it comes to necessity, Mortgage Loans are an attractive option to purchase a dream home. But It’s not uncommon for a borrower to hit a roadblock in paying off the Mortgage Debt.