Whatever your motivations for searching for a home in the United Arab Emirates (UAE), it’s crucial to comprehend the types of mortgages that are offered as well as the procedures involved in setting one up.
Who is eligible to get a mortgage in the UAE?
If you are a citizen or resident of the UAE, between the ages of 21 and 65, and earn between AED 10K and AED 25K per month in salary, you may apply for a variety of mortgages in Dubai (self-employed).
Although it mostly depends on bank rules, certain banks permit UAE citizens with a monthly income of at least AED 8k to apply for a mortgage in the UAE.
In the UAE, non-residents can also look into their mortgage alternatives. However, they have few options because few institutions offer mortgages to people who aren’t residents of the country.
Types of mortgages in the UAE
Financing your property investment is one of the most important considerations to make if you plan to enter the Dubai or any other Emirates real estate market.
In order to pay for their purchases, the majority of people in the UAE use mortgages. However, if you are making your first purchase, you may find the mortgage application procedure in the UAE, as well as the laws and regulations that apply to it, to be extremely overwhelming.
The information you need regarding mortgages in the United Arab Emirates and the legislation governing them is provided below.
Fixed-Rate Mortgage
The interest rate is predetermined for fixed-rate mortgages in Dubai. Earlier than the commencement of the loan’s term, to put it another way. Throughout the duration for which the rate is fixed, it doesn’t change.
Variable-Rate Mortgage
In contrast to fixed-rate mortgages in Dubai, visible-rate mortgage interest rates in the UAE are subject to change over the course of the mortgage loan.
With a variable rate mortgage, the interest rate will change over the course of the loan according on the state of the UAE market. The fluctuating rates are connected to the CBUAE (Central Bank of the UAE) EIBOR rates.
Capped Mortgage
Variable-rate mortgages have characteristics known as capped mortgages. Prior to the start of the term, a maximum cap is established for the variable-rate offer. Even if market rates increase, the monthly payment will not go beyond the predetermined limit. Keep in mind that capped mortgages are only available as an initial offer for a short period of time.
Offset Mortgage
In the UAE, an offset mortgage is a relatively new idea. Loan holders have the option to link their credit card, savings account, current account, and loan account under an offset mortgage. Anytime money is credited to one of the accounts, the loan amount is offset by the amount that was credited.
How do you find the right mortgage?
Selecting the ideal mortgage in the UAE is a significant choice that can significantly impact your financial situation. Finding the mortgage that best meets your needs might be difficult with so many alternatives available, especially if you’re a first-time buyer. When selecting a mortgage in Dubai, there are several things to consider.
Your lifestyle
You also need to take into account your cost of living, which is the amount of money you spend on necessities like food, entertainment, gym membership, dining out, and so on. The cost of living plays a significant role in figuring out how much house you can afford and where you want to reside.
The type of property you want to buy
Your mortgage payments will mostly be determined by the price of your property, which can change depending on where you want to live and what kind of location you want. To determine how much you can spend on your property, use this mortgage calculator for the UAE.
Amount needed
Sometimes people search for their ideal property in Dubai first, then submit a mortgage application in the UAE. It might work, but you might not be able to get the entire amount of mortgage financing you require to buy the property.
Available cash deposit
The minimum cash down payment required in Dubai when purchasing real estate with a mortgage is established based on the purchase price of the property and your residency status.
Required documents to get a mortgage in UAE?
Anyone in the UAE who wishes to purchase real estate with a mortgage must first submit an application. It goes without saying that paperwork is necessary to submit a mortgage application in Dubai. You will generally need the following documents to apply for a mortgage in Dubai, though the criteria may differ slightly between banks.
ID
It is recommended to get a mortgage pre-approval before searching for a property so that you are in a the strongest position to move ahead with an offer as soon as you see your dream home.
Residency
You will need to supply proof of residence (copy of tenancy contract or DEWA bill).
Bank statement
Your bank statements – for the past six months – will need to be submitted.
Pay slips
During the process of applying for a mortgage in the UAE, your payslips for the past six months will need to be supplied.
Business documents
For Business Owners, the lenders will need to see a copy of the company registration documents along with copies of six months’ business bank statements.
Required income to receive a mortgage in the UAE
If you would like to purchase an apartment in Dubai – or are more inclined towards buying a villa or townhouse – you can easily secure a mortgage loan for it, given you meet the eligibility criteria. You can apply for a mortgage in Dubai if you have a monthly income of AED 10K (salaried) and AED 25k (self-employed).
Mortgage rates in the UAE
As it is known to all, the UAE has become a global hub in terms of trade, tourism, and several other industries. It also has one of the most advanced financial and legal systems in the region, allowing residents and ex-pats to manage their financials in the most secure, transparent and convenient way.
Where to start when applying for a mortgage in the UAE | Process of applying for a mortgage in the UAE
In Dubai, home mortgages are provided through banks and mortgage lenders These must be registered with the Dubai Land Department (DLD) in order to be legally valid. You are able to directly approach your bank for their available mortgage deals or, alternatively, you can use a registered mortgage broker who will have access to the whole of the lending market and potentially offer exclusive offers .
Understand your affordability
In the UAE, the Central Bank sets guidelines as to how the affordability of a loan is calculated. The calculation takes all of the provable income – that the applicants earn – into account.
A total of 50% of this amount can be used towards the total liabilities in the UAE. This can be made up of any existing credit agreements plus the home loan that is being applied for. You can check the mortgage calculator here to work out your affordability for a loan.
Assess your income
Your mortgage loan application in the UAE is more likely to be successful if you fully understand how you’re spending your income and how the banks treat categories of expenditure differently.
Research lenders
There are over 500 products available from 20+ lenders in the market, so finding the correct home loan can be tricky.If you want to have someone search multiple lenders for you and come up with the best loan option, working with a mortgage broker (such as Capital Zone) might be your best bet.
Get your paperwork together
You need to make sure that all of your paperwork is together before you start house-hunting. Having this available allows you to move quickly with an application to approve your home loan.
Pre-Approval
Mortgage pre-approval is the first step in the mortgage process for buying a property when the bank reviews your application and issues a letter or email that will state that they have pre-approved you and will lend you the amount requested.
Find your home
It’s now time to find the perfect home. Pre-approval letters are generally valid for 60 to 90 days, depending on the lender. This gives you ample time to search for the property you wish to purchase.
