Dubai has become heaven for expats looking for a luxurious lifestyle in a modern, well developed city. If you’re planning on residing in Dubai for the longer term, you might be tempted to buy a home instead of renting. The good news is that this is now possible for foreign residents to own property in Dubai, and many mortgage providers are available to help you with finance of up-to 70% of the property value. whether you’re looking for an investment or for a new family home.
Whatever your reasons for looking for a property in Dubai, you need to understand the entire mortgage process and that’s why we’re here to give you a complete guide to obtaining a mortgage in Dubai.
This handy guide covers which banks offer best mortgages and home loans in Dubai to Expats and non-residents, the paperwork you’ll need, what it might cost you and every aspect involved in the all process until you get the keys to you home.
Mortgages in Dubai: What is Mortgage?
A mortgage, or more precisely a Home loan, is a type of loan you obtain to pay the value of the property.
As the borrower, or mortgager, you repay the lender, or mortgagee, the loan principal plus interest, gradually building your equity in the property.
The interest may be calculated at either a fixed or variable rate, and the term of the loan is typically between 10 and 30 years.
While the mortgage is in force, you have the use of the property, but not the title to it. When the loan is repaid in full, the property is yours. But if you default or fail to repay the loan, the mortgagee may exercise its lien on the property and take possession of it.
Mortgages in Dubai: What are the types of mortgages available in uae.
There are many different mortgage products in uae, the range of choice means that you need to do a bit of research in advance to understand how the different products work, so you can make a considered decision about which suits your needs best.
The first thing you have to decide is whether you want a fixed rate or variable rate product. Fixed rate mortgages will guarantee the same interest rate will be applied for the duration of the agreement. This is usually in the region of about five years, after which the mortgage will revert to a rate set by your bank. This rate isn’t always the best deal available, so it’s good to understand and know if you can switch if there’s a better offer available after the fixed term.
There are different types of mortgages available. we will go over the most common, and some of the most important details about each type in detail.
Standard Variable Rate (SVR) Mortgages, this mortgage uses a non-fixed interest rate. This rate will go up or down depending on the base rate of the bank that the loan is attached to. When interest rates rise, your monthly payment will go up. When interest rates go down, your monthly payments will decrease.
Fixed Rate Mortgages are the opposite of SVR mortgages. interest rates do not fluctuate. You’ll be offered an interest rate at the start of the mortgage, and whether interest rates move up or down, your interest rate on your home will not change. That said, fixed rate mortgages don’t always last the entire tenure of your mortgage. There may be a 3 year fixed rate, after which the bank re-evaluates the interest and offers a new interest rate agreement.
Discounted Mortgages are offered by lenders as a way to reduce the percentage cost of a SVR mortgage. You may receive a discounted mortgage at 1.0% percent off the SVR for 3 years, after which you pay the full standard variable rate.
Capped Mortgages combine both variable and fixed mortgage concepts. You’re given a maximum limit that your interest rate can rise, but otherwise it will rise and fall as a normal SVR mortgage would. In most cases, capped mortgages have a pretty high ceiling in terms of how high these interest rates can go.
Current Account Mortgages merge your mortgage with your current account to create a single balance. Other lenders take this concept even further, connecting credit cards, personal accounts, and all additional personal loans into one lump account.
Offset Mortgages are like current account mortgages in that they rely on your savings to reduce what’s owed on your mortgage. Unlike current account mortgages however, your bank accounts (both saving and current) are kept separate
Different banks and brokers will offer different products, and not every customer can access all of the loans available. There are mortgages which might not suit your needs as an expat buyer. You’ll likely need to take specialist advice to help you understand all the products available to you.
Should i go to a bank or use a Mortgage Expert?
Where you’re unsure of your eligibility for a mortgage, it is a good idea to take expert advice from a qualified mortgage Advisor. This is important if you’re new to the Dubai mortgage market and not familiar with all the options or regulations.
A really great resource for finding mortgage expert advice in Dubai is Moneymall.info This site allows you to search for mortgages which are suited to your needs as an expat buyer, and generates potential options for you. You’re then able to apply directly to the institution of your choice.
We have helped thousands of expats to get their mortgages at a zero cost. Guiding them through the loan origination stage until they get the keys to you home. Click here to request for a free consultation.
How can i get the best mortgage rate in Dubai?
The options for you to getting a low interest rate mortgage in Dubai vary depending on your personal circumstances i.e. credit score profile and the value of the property you want to invest in. Offers vary, so it’s worth talking to a few brokers or banks to see what deals they can offer you. We really recommend you to visit our website Moneymall.info to compare the best mortgage options available on the market.
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What’s the down payment for Mortgage in Dubai?
There are no exceptions when it comes to current down payment guidelines provided by the Central Bank in UAE. All Mortgage applicants have to contribute a payment portion.
Maximum LTV or Loan to Value to purchase a ready property:
For expatriates who want to purchase ready properties-
- If the property value is 5 million in AED or below, the LTV stands 75%.
- If the property value is more than 5 million in AED, the LTV stands 65%.
- If you are buying a second investment property or a home, the LTV stands about 60%.
For example, a bank can offer about AED 750,000 for a property with 1 million value in AED, depending on the eligibility.
Similarly, a bank can offer about 3.25 million in AED for a property with 5 million price value in AED, depending on the eligibility.
For UAE nationals who want to purchase ready properties-
- If the property value is 5 million in AED or below, the LTV stands 80%.
- If the property value is more than 5 million in AED, the LTV stands 70%.
- If you are buying a second investment property or a home, the LTV stands about 65%.
- These LTV values are applicable to freehold as well as leasehold ready properties.
Maximum LTV or Loan to Value to purchase an off property:
The off plan properties have the same 50% of maximum LTV for both UAE nationals as well as expats.
The step-by-step process for obtaining a mortgage in Dubai.
To get a mortgage in Dubai, you’ll generally need to follow these steps:
Step #1: Choose your property
The real estate market in Dubai is very well developed. There are dozens of different developers, from known brands like Emaar, Danube, damac and to more. The range of choice means that you need to do a bit of research in advance to choose the property that suits your budget.
There are many platforms online to find properties in UAE. You can select a few of many reputed sites to get their listing, you will gain different options of ready properties and off plan properties. However, ready properties are more popular among buyers.
Step #2: Get an agreement from the property seller
To ease the process, you should consider getting services of a licensed broker or a reputed real estate agency together with a lawyer to complete the property transaction.
Step #3: Calculate mortgage using Mortgage Calculator and find a list of best-suited mortgage options
Once you obtain an agreement regarding the purchase price of the selected property. Then calculate your mortgage by use of a mortgage calculator. If you have no idea how to do this our mortgage advisors will help you in all this for free.
Step #4: Arrange the paper work (documents) as required by the bank to process your mortgage.
The exact paperwork you’ll need will depend on the bank you use. However, you can expect to be asked for the following:
Salaried employees:
- Copies of your personal identification documents (passport)
- Proof of legal residence in Dubai, and evidence of your current residential address (visa copy and residential identification)
- Documents to prove you’re creditworthy (usually bank statements, proof of your wages, a letter from your employer)
- Disclosure of every monthly liability such as a car loan, credit card, personal loan or others.
- Documents to prove the affordability of the mortgage e.g. Availability of fees required for mortgage processing, Down payment proof.
All over the world, affordability is an important deciding factor in whether or not you’ll be offered a loan. in Dubai the law requires that your debt payments come to no more than 50% of your income to be eligible for a mortgage.
Our mortgage experts will assist you to review your documents and ensure that you collect all the required documents as required for your mortgage approval.
Documents’ requirement for a self-employed:
- A copy of valid passport.
- Expatriates should present their valid visa.
- A valid Emirates identification.
- MOA or Memorandum of Association, plus, incorporation documents.
- Audited financials of previous 2 years.
- Disclosure of any monthly liability such as a car loan, credit card, personal loan, or others.
- Mortgage processing fees.
- Down payment proof.
Documents’ requirement for a Non resident
- A copy of valid passport.
- MOA or Memorandum of Association, plus, incorporation documents if his self-employed.
- Disclosure of any monthly liability such as a car loan, credit card, personal loan, or others.
- Mortgage processing fees and Down payment proof.
- Credit Reference Agency Report from an approved Agency in the applicant’s country of residence (no older than 30 days)
- Copies of original 6 months’ personal bank statements from all overseas transactional accounts (latest statement no older than 30 days)
- Self-employed clients – Copies of original 2 years audited financial accounts (most recent no older than 18 months)
- Self-employed clients – 2 years’ tax assessments signed-off by the relevant tax authority (not more than 12 months old)
Step #5: Submit your documents
After collecting all the required documents and verified by your mortgage advisor you can fill the bank forms and provide your documents along with them. Your representative can contact bank authorities with the forms and the required documents
This is the time you wait the bank to present you a pre-approval letter or declines your mortgage application.
Step #6: Get the pre-approval from your Bank
This is a letter, which includes the name of the applicant along with the amount of loan approved by the bank. Along with that, pre-approval letter also shows all the conditions which you must compete in obtaining the final approval.
The validity of a pre-approval letter lasts for 30 to 90 days. The exact time period depends on the guidelines followed by the selected bank or a financial institution.
Step #7: Wait for Property Evaluation from the bank
Next, the bank will guide you to carry out a property appraisal with their approved agencies.
You have to pay a fee for this valuation, which ranges between AED 2500 and Dh 3000 along with taxes
Step #9: Obtain an Offer Letter
Once the property evaluation is done and the bank receives the report on valuation, the final offer of your mortgage is initiated. After meeting all the conditions presented in the pre-approval letter.
The bank will issue you with a final offer letter which you will have to go through carefully with your mortgage advisor and then sign it to complete your mortgage deal.
Step #10: Go through a medical check-up
The mortgage loan is of a high amount, which is why you are advised to go through some medical check-ups. Your current medical conditions matter and best on the medical result you can be asked to get life insurance.
Step #11: Fulfill the request for a certificate of no objection
First of all, get all the signed documents and property-related documents in order. The bank asks for a NOC or No Objection Certificate from the seller and buyer.
If you have involved real estate professionals, they take care of arranging this letter.
Step #12: Complete the property transfer
A representative from the bank will help you with the property transfer. The process takes place at one of many Land Department offices in Dubai.
Step #13: Receive copy of your tittle deed and the key to your house.
The Title Deed should have your name as the property owner. Plus, the bank is represented as your mortgage provider. It is Land Department only authorized to provide you with a Title Deed.
You only receive a copy of the prepared Title Deed, as the original Title is received by the lender bank. Plus, you receive a key of the property from the seller.
After successfully transferring the property in your names and obtaining the tittle deed, your mortgage becomes effective and you start to make monthly payments to the bank as per your mortgage contract.
Our Expert recommendation
A Mortgage process can be a daunting and intricate process especially for first time buyers that’s why we strongly recommend that you seek services of an experienced mortgage Advisor to guide you in your mortgage application.
At moneymall.info we strive to find you a mortgage that not only meets your requirements, but exceeds your expectations in terms of rate, product and service. Our mortgage advisors are working with top tier mortgage lenders in the market. Speak to us now and we shall guide you throughout your mortgage process till you get your house keys for free.