Expats Guide to Getting a Property Mortgage In Dubai 2021

Mon, 21 Dec, 2020

Dubai has established itself as one of the most prosperous and progressive cities in the world today in many aspects like international trade, tourism, multiculturalism, lifestyle or any other factor, Dubai is sure to score very high on each of them.

The city hosts a huge number of expats and is regularly visited by tourists as well. It has a welcoming environment and regulations, allowing everyone to become a part of the thriving economy. Due to these aspects, buying property in Dubai is highly desirable. 

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Property Market in Dubai

The property market of Dubai is one of the most attractive and lucrative ones present. Dubai is home to some of the world’s most trusted and accomplished real estate development companies, with DAMAC leading the way, which has led to a cluster of high-end and renowned projects.

One can find highly luxurious housing societies, buildings, and other projects in the city offering a dream lifestyle. Along with that, there are also many wonders of architecture and planning which cover golfing societies, man-made lakes, and a whole lot more. 

Since Dubai carries a huge potential as a property hub, it is understandable that its property prices are also higher than some other cities of UAE. One can be sure of finding the best lifestyle and lucrative returns on investment, but also should expect to pay a substantial cost for it.

But there is still no need to worry as the government of the UAE and its financial institutions have made it very easy for everyone to own a property anywhere in the country, including Dubai. 

Investing in Dubai

From old residential areas like Deira and Bur Dubai to the high-end modern vicinities like Dubai Marina, Palm Jumeirah, and Al Sufouh, you will find a lot of choices for investing in Dubai real estate with varying attractions and costs.

The more you are willing to invest, the greater the amenities and attractive features you can get. Moreover, the commercial centers like the Business Bay and Downtown Dubai are ideal for anyone interested in setting up a workplace or looking for a bustling neighborhood. 

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Along with these areas, there are some upcoming residential vicinities like Dubailand, Dubai South, and Jebel Ali, which are at a manageable distance from the central locations of the city but are home to some prolific residential developments like DAMAC Hills and Akoya Oxygen. These vicinities and projects are hot-cakes for anyone looking for a high-end residence or a beneficial investment opportunity. 

With all these choices, investors from all backgrounds and budget can be sure of finding the ideal location and property to invest in. The best thing to know is that most perfect vicinities offer freehold properties, so expats can also enjoy the benefit of owning a desirable property in Dubai. It is advised that expats should find out about the freehold areas in Dubai to know about the available options. 

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Regulations and Utilities in Dubai

The most relevant and influential authority that overlooks all the matters of property and real estate in the city is the Dubai Land Department (DLD). It overlooks all the process of development, buying & selling, registration, mortgage and every other aspect related to real estate.

Expats must know about this authority and all its regulations, as they are the ones that must be followed at every stage. The Real Estate Regulatory Agency (RERA), which is the most relevant authority if you are looking to buy a property through a mortgage, is also a part of the organizations forming the DLD. 

Dubai Electricity and Water Authority (DEWA) ensures the provision of utilities in all parts of Dubai. The property owners also have to consider the additional costs they will have to pay for the utilities, which depend on the area and project. They can find out about the service charges they have to pay for any given property before making the final choice. 

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Mortgage Financing in UAE

Mortgage financing has been on the rise in almost all parts of the world, as it allows people with handsome annual incomes to buy the properties of their choice and pay the price in the form of easy installments.

This financing method can bring some of the most sought-after properties within your reach, while also allowing you to escape the burden of rental payments, which also don’t contribute towards long-term asset.

In UAE, you have the luxury of finding the best assistance in terms of mortgage rates, eligibility criteria, loan terms, early settlements, and other aspects which can help you get your dream home in Dubai with great ease. 

Difference Between Conventional & Islamic Mortgage

A conventional mortgage is when a financial institution will lend you a loan and you will repay it along with a percentage of interest, which will count as profit for letting an investor borrow funds.

This mortgage is made up of a principal amount and the interest charged on that amount. Typically, you have up to 25 years to pay off a mortgage, which is why these loans are also known as repayment loans.

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An Islamic mortgage is different from conventional mortgage since under the Law of Shariah, it is forbidden to charge interest on a loan. In this case, the lender will buy your property on behalf of you and will then lease or rent it back to the investor for a profit. A major benefit of Shariah-compliant home mortgage in Dubai is that the buyer does not have to pay interest payments as late fees, although the bank itself may charge a fee.

A type of Islamic mortgage is the Ijarah which is a form of off plan property mortgage in Dubai and other cities of UAE. This model is quite useful as you do not have to make any payments until the entire property is completed.

Difference Between Fixed or Variable Interest Rates

When it comes to property mortgage in Dubai, there are several different types that home buyers can avail.

Fixed Rate Mortgage

This type of mortgage locks the interest rate in for the full tenure of the mortgage. This allows you to know beforehand the exact amount of payment you will need to make throughout the entire loan term. Depending on your agreement with the lender, fixed rate mortgage may be paid off at any time without penalty or they may be closed, i.e. breakage cost will be applied if the mortgage is paid off before maturity.

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Variable Rate Mortgage 

Variable mortgage is another type of home loan in Dubai for expats and nationals. This type of mortgage varies with the fluctuating interest rate. If the interest rate goes down, the monthly payment is reduced. If the interest rate goes up, the monthly payment is increased. Hence, this kind of mortgage carries a certain degree of uncertainty. 

Like fixed rate mortgage, variable rate mortgage may be open or closed. It also allows you the flexibility to convert to a fixed rate mortgage at any time.

Dubai Property Mortgage Rates

If you thought that buying a high-end property is not an option for everyone, you need to think again. It is known that property prices in Dubai are on the higher side, but with sophisticated financial solutions available in the city, there is no reason for you to give up on your dream home.

Once you start looking for options, you will find a lot of banks, lending firms, and even top developers like DAMAC offering you flexible and convenient mortgage loans to buy your favorite properties. 

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Here are the mortgage rates usually offered by banks in Dubai

 

Bank Name

 

Starting Interest Rates 

 

Minimum Salary Requirement

 

Maximum Loan Amount

 

Standard Chartered (Mortgage One)

 

3.55 % (Decreasing)

 

AED 15000

 

AED 18M

 

RAKBANK

 

2.99 % (Decreasing)

 

AED 15000

 

AED 20M

 

CBD

 

2.99 % (Decreasing)

 

AED 15000

 

AED 10M

 

Emirates NBD

 

3.29% (Decreasing)

 

AED 15000 (AED 20000 for self-employment)

 

AED 15M

 

ADIB

 

3.49% (Decreasing)

 

AED 15000

 

AED 15M

 

Standard Chartered (Home Suite)

 

3.12% (Decreasing)

 

AED 15000

 

AED 18M

 

These are some of the options you have on your hands to buy any property in Dubai. If you are interested in buying properties in a DAMAC project, you can find a more attractive and convenient deal through DAMAC Mortgage Assist. 

DAMAC, partnered with ADIB, has brought the most convenient method of buying your favorite properties. Investors can now offer the lowest mortgage rates of just 1.99% for 7 years. The loan terms offered are up to 25 years, which is a huge period to pay-off your loan with ease. UAE nationals can receive financing of up to 85% of the property’s value while for expats, the maximum financing that can be availed is 85%. 

Maximum Home Loan to Value Ratio for UAE Nationals

When buying a property through mortgage, it is important to keep in mind that you will need to pay a down payment as well as monthly installments.

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The minimum down payment for UAE nationals is 15%, with the mortgage amount making 85% for properties that have a value of up to AED 5 million. For properties that are higher than AED 5 million, UAE nationals have to pay 30% as down payment, and get a loan to value ratio of 70%.

Maximum Home Loan to Value Ratio for eliExpatriates

According to the law of Dubai mortgage for non residents, expats can get a home loan of up to 80% with a minimal down payment of 20% if they buy a property with a purchase price of up to AED 5 million. If the value of the property is more than that, expats the loan to value ratio will be reduced to 65% with a minimal down payment of 35%.

However, for off-plan property mortgage in Dubai requires a down payment of 50% with a loan to value ratio of 50% as well.

Applying for a Dubai Property Mortgage

One might think that there must be tons of requirements and legalities to be fulfilled before a mortgage loan can be applied for. That is not the case, as the process of obtaining a mortgage loan is very simple for everyone living in Dubai, with minimal paperwork, requirements, property insurance cost, and processing time. Let’s take a look at key essentials one should know about before applying for a mortgage loan.

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Eligibility for UAE Mortgages

This is the most important thing to know about, so you can prepare yourself well before applying for a Dubai Property Mortgage. Firstly, UAE nationals and expats, both can easily purchase a property through a mortgage loan as there are no legal barriers related to nationality.

Going past legalities, the banks and other lending institutions gauge the eligibility of an applicant based on income and previous credit. Depending mostly on your income, the banks assess your profile against the loan amount requested. 

Before applying, you must ensure that the amount needed to be paid monthly or annually, doesn’t exceed 25% of your income for that period. This way, when you apply for an amount that is within this threshold, you are most likely to go through the process successfully. 

Other Dubai property mortgage requirements are given below:

  • You need to be a UAE national or permanent resident
  • You need to be aged between 21 and 65 years.
  • You should have a minimal monthly income of at least AED 15,000 if you are a salaried individual and AED 25,000 if you are self-employed.

Keep in mind also that the minimum salary for a home mortgage in Dubai for expats and nationals can vary based on the bank you are dealing with. There are some banks ion the UAE which allow people who have a monthly income of AED 8,000 to apply for a home mortgage; however, this is subject to terms and conditions.

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There may be more options for mortgage in Dubai for expats; however, keep in mind that only a few banks deal with home loans for non-residents.

Documents Required to Obtain a Mortgage in Dubai

If you want to buy a property in Dubai through mortgage, you will need to deal with some paperwork. There is not a lot of documentation required while applying for a loan. Some of the documents you need to submit include: 

  • Your passport and visa copies
  • Your Emirates ID copy
  • Proof of residence in Dubai through tenancy contract copy or DEWA bill.
  • Creditworthiness proofs i.e. bank statements, salary proofs, tax returns, or certificates from employer.
  • Documents that ensure affordability of the loan amount

For non-residents, the requirements are fewer and you only need:

  • A copy of your passport
  • A bank statement for the last three months.

With all these ready, you can easily get the process underway and wait for the approval which takes about two weeks. 

But there is more to it. If you make a list of the most desirable properties in Dubai, you will encounter DAMACs name a lot of times, as it is one of the most prominent real estate entities in the country with a lot of high-end projects in its portfolio. If you are planning to get your hands on any of the DAMAC’s properties, you can enjoy much more convenience than anywhere else. 

All you need to do is get connected to DAMAC Mortgage Assist, and you won’t have to deal with the complexities of paperwork. The project also offers a Dubai property mortgage calculator that allows yiou to calculate your monthly installment and interest rate once you place some basic financial info in it.

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DAMAC’s highly proficient property experts will be there to handle everything and guide you at each step of the process, making it much easier for you to get a desirable property in Dubai with lowest financial costs. Moreover, the processing time at DAMAC is also much less, where you can get things done in just three working days. 

Mortgage Calculation

Calculating mortgage is a tough task, which is better left with the experts only. But if you are looking to get some idea about the EMI’s you have to pay for servicing the loan before applying, you can contact any of the experts at DAMAC Mortgage Assist or use DAMAC’s Property Mortgage Calculator in Dubai. By doing so, you will quickly find the monthly payments you will have to make for any given property that you like. 

Application Process 

The process is very simple for the applicants, as most of the work is be done by the financial institution and service providers. You have to simply follow these steps: 

  • Find mortgage brokers or lawyers to assist you with arranging the required documents. 
  • The documents will then be submitted to a bank or financial institution of your choice. 
  • You will get approval and the maximum property price. 
  • Find the properties within that range and choose one of them. 
  • Make the down payment and get the repayment schedule for servicing the loan. 
  • Provide any documents required by your bank to finalize the mortgage. 

If you chose to buy a property in Dubai through DAMAC Mortgage Assist, your process will become much simpler and involve these steps. 

  • Contact DAMAC and provide income details. 
  • Select from a list of properties available for you and get the process started. 
  • Once the loan is approved, make the down payment and receive the repayment schedule. 
  • Get ready to move into your new home. 

Things to Consider

There are a lot of things you have to consider, as property mortgage in Dubai is a detailed process with a lot of financial calculations and legalities involved. Here are some important aspects: 

Legal Requirements

The applicant has to abide by all the legal requirements set by the regulatory authorities in Dubai. The eligibility criteria and paperwork requirements need to be fulfilled to get the mortgage deal registered with RERA. Failing to do so will make the mortgage agreement void. 

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Additional Costs

There are several costs attached to every mortgage loan, starting from registration charges, mortgage consultancy, lands department fee, mortgage life insurance, and bank charges. It is important to find out about all these additional costs so you can prepare for them. With DAMAC Mortgage Assist, you can avoid consultancy charges and several other additional costs. 

Important Terms

There are many legal and financial terms regularly used during the process of a mortgage loan. Knowing the basic terms involved will help you understand the process and its requirements in a better way. Here are some key terms: 

Loan-to-Value Ratio (LTV): It is the percentage of the property price, which will be financed by the bank or lender. 

Outstanding Balance: The total amount remaining to be paid off at any point. 

Pre-Approved Mortgage: A loan amount which is already approved by a bank against your profile. With a pre-approved mortgage loan, you can simply find any property that falls within the defined price bracket. 

Partial Settlement: When you bail out of a loan by paying less than the previously agreed amount. It negatively impacts your credit ratings which can cause trouble for future loans.

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Frequently Asked Questions

Can I get a mortgage in Dubai? 

Yes, one can easily get a mortgage loan in Dubai. Expats must know that they can get a mortgage for freehold properties only, while UAE nationals can get a mortgage for any property. 

How does a mortgage work in Dubai?

The mortgages follow a very simple process in Dubai. You can get a loan approved in about two weeks, make the down payment, and then pay the rest of the amount in easy installments. 

How much deposit is required to buy a house in Dubai?

UAE residents have to pay a minimum of 15% of the total property price whereas the expats have to pay a minimum of 20%. 

Is it worth buying a house in Dubai?

Buying a house in Dubai is highly lucrative and beneficial. If you have an opportunity, you must buy a house in Dubai especially if you are currently residing in the city.

What is the future of Dubai real estate?

Dubai will continue to be the center of business and tourism for the years to come. Its property market has seen a continuous surge in the last few decades and is deemed to continue this way. 

What are the home loan rates in Dubai?

Different banks offer different home loan rates. You can check out all the factors before selecting a bank or offer. Usually, the rates offered range from 2.9% to 3.6%. For buying a DAMAC property, you have the best option in DAMAC Mortgage Assist, which offers you an interest rate of just 1.99% in collaboration with Abu Dhabi Islamic Bank (ADIB).  

Can I buy a property in Dubai?

Anyone living in Dubai can buy a property here. Expats have to find freehold properties to purchase. 

Which bank in Dubai offers the best mortgage loan?

It depends on your needs and situation. There are factors like interest rate, loan term, loan amount and other factors that will vary when you consult different banks. You have to compare all the choices and find the most suitable one. For buying a DAMAC property, the best way is to opt for DAMAC Mortgage Assist. 

How to get a home loan in Dubai?

Getting a home loan in Dubai is very simple. You need to find some banks, compare their offerings and choose the one which suits you most. You will need to provide some documents before the application process gets started. 

Where can I find mortgage in Dubai as a non-resident?

Almost all the banks and lenders offer mortgage loans to non-residents in Dubai. All you need to do is compare the offers and make a calculated choice. 

Is Dubai a good place for real estate investment?

Dubai is one of the best cities for real estate investment. The city has booming trade and tourism industries, with expats and visitors coming here in large numbers. Investing in a Dubai property is ideal considering the expected capital gains, comfortable living standards and attractive rentals. So it is a good deal for potential residents and investors.

How long does it take to secure a mortgage in the UAE?

Typically, the entire process of Dubai Property Mortgage takes about two weeks or 10 working days before you get the mortgage offer letter. This includes the time it takes to secure pre-approval on your application. 

 What kind of places are eligible for expats to buy property in the UAE?

Mortgage in Dubai for expats is offered for freehold properties. These properties can be rented, sold to another person, or inherited. Freehold properties consist of relatively undeveloped parcels of land, rather than finished homes, villas, townhouses, or apartments in the UAE. This allows buyers to develop the property of their own on this land.

Since freehold properties give full ownership to the investors, these properties may be used for any purpose. They also do not require consent from the government and does not have as much documentation.

If you are interested in getting freehold properties in Dubai, you can purchase them from leading real estate developers like DAMAC Properties.

Can expats acquire mortgage to buy a property in the UAE?

Expatriates and foreigners how have an income of at least AED 15,000 if they have a job or an income of at least AED 25,000 if they are self-employed, may be able to get home mortgage in Dubai.