Mortgage in Dubai for foreigners

Dubai is a city of great opportunities. It is possible to buy real estate in Dubai today even if you do not have the necessary amount of money. UAE banks offer buyers the possibility of mortgage lending. Mortgages are issued not only to residents of the United Arab Emirates but also to visiting foreigners.

Contents:

• Features of mortgage registration in the UAE
• Types of mortgage loans in Dubai
• How can a foreigner get a mortgage in Dubai?
• Restrictions on mortgages for foreigners
• Mortgage rates in the UAE
• Banks with the most favorable rates
• Maximum mortgage amount
• We will help you get a mortgage in Dubai

Features of mortgage registration in the UAE

You can get approval for a mortgage loan in the UAE if you meet all the conditions and collect the documents correctly. The borrower is required to meet certain criteria to obtain a mortgage.

• Firstly, he must have a resident visa;
• Secondly, he must be employed or have his own business in the Emirates;
• Thirdly, there is an age limit of not less than 21 years and not more than 65 years;
• Fourth, the borrower is required to make an initial payment of at least 25% of the price of the purchased apartment/home as well as pay all the accompanying costs for mortgage consideration.

Another criterion, which is optional but still welcome, is that the borrower has already paid-for property in the UAE.

The mortgage is issued for a period of 5 to 25 years. It should be noted that the closer the borrower's retirement age, the shorter the mortgage loan term and the higher the monthly payment.

The buyer can apply for a mortgage loan for apartments in new buildings in Dubai or real estate under development. As for foreigners who are married, it is important to know that when buying real estate in the United Arab Emirates with a mortgage, it is recommended to initially register the purchased housing as joint ownership that specifies each owner. If this is not done, UAE law will only consider the owner as the one to whom the mortgage agreement is granted.

Types of mortgage loans in Dubai

Mortgages in the UAE, including Dubai, are offered in several ways. Before choosing a suitable option, the borrower should familiarize him/herself with all the existing types of mortgages. The choice of a certain mortgage loan option depends on the financial capabilities of the borrower. The main types are listed below:

• Mortgage with a fixed interest rate. This means that the interest rate will not change for the entire loan period.
• Mortgage with a floating interest rate. In this case, the interest rate changes every month. The minimum rate in this type of mortgage is 2.5%. The percentage changes according to the set rate of the Central Bank of the UAE. Fluctuations in the exchange rate directly affect the interest rate.
• Mortgage with a discounted rate — when a discount is provided for a floating rate, for example, 0.5%, not for the entire loan term but a certain period.
• Mortgage with an upper limit rate. This is an option with the same floating interest rate, but in this case, the rate will not rise above the specified criterion - for example, not higher than 9.5%. This type of mortgage, like a mortgage with a discounted rate, operates mainly in the first few years of the loan.
• Refinancing. This is when you obtain a mortgage secured by an existing mortgage. That is, you can get refinancing in another bank or the same one where you already have a mortgage loan. This is advantageous when a new loan is provided at a lower rate.
• Regulated mortgage. This is a very interesting and profitable albeit complex type of mortgage. Not every bank grants this option. The essence of a regulated mortgage is that the borrower can combine all his accounts, for example, credit, savings, and credit cards. When funds are received in any of these accounts, the loan amount is reduced by this amount. For instance, if the amount of debt on a loan is AED 500,000 and AED 100,000 has been received on any of these accounts, then the loan amount is reduced to AED 400,000. The interest rate will be charged on the remaining amount of the loan debt. It is also interesting that the borrower can freely use the funds received in his/her account.

How can a foreigner get a mortgage in Dubai?

If the buyer has chosen a bank and decided on the type of mortgage lending, the future borrower needs to get preliminary approval from the bank. The verification process with the bank lasts no more than 4 days. The bank checks the borrower's ability to pay bills by analyzing their credit history, assets, and income.

UAE financial institutions check every potential borrower. To do this, a potential homeowner must provide documentation of an existing bank account, its condition for the previous 6 months, a certificate of income, information about the employer, and a completed application for a mortgage loan. Those who have their own businesses need to provide audit results for the last 24 months, and a profit and loss statement for the previous 12 months.

If everything is in order and the borrower has passed the check, within 2 months from the date of the mortgage approval, he/she must choose the property he wants to purchase. After the buyer has chosen the property, he must pay the fee in the form of a check. Thereafter, the bank evaluates the housing, for instance, apartments in Dubai or another emirate. Only after this step does the bank makes a final decision on the approval or refusal of mortgage lending.

In the Emirates, banks charge a rate of about 1% of the purchased housing for mortgage consideration. In addition, the buyer must pay insurance, the amount of which does not exceed 1% of the apartment or house.

Mortgage transactions in Dubai are breaking records according to research by the Mortgage Finder company. In the first half of 2021, the volume of leveraged transactions increased by 91% compared to the second half of last year. Mortgage deals reached 40% of all sales in Dubai.

RESTRICTIONS ON MORTGAGES FOR FOREIGNERS

One of the main indicators for mortgage loan approval is the ratio of the total number of payments to the total amount of all available funds of the borrower. He may have other loans but the total number of all payments should not exceed 50% of the monthly income. This must take into account that after all mandatory payments, at least AED 3,500 per month will remain for each person in the family. If this indicator does not match, the buyer may be refused a mortgage loan.

The requirements for a non-resident borrower in the UAE depend on the specific bank. For instance, in the HSBC Bank, a loan is issued to a foreign client in the amount of 5 to 60% of the cost of housing. The age of the borrower must be in the range of 21 to 60 years.

ADIB Bank (Abu Dhabi Islamic Bank) provides mortgage loans for the purchase of apartments in the amount of not less than 10% and not more than 50% of their value. At the same time, the borrower must be at least 21 years old but not older than 55.

Mortgage rates in the UAE

There are 2 types of interest rates in the United Arab Emirates - long-term and short-term. The interest rate on a mortgage loan in Dubai financial institutions ranges from 2,5% to 9% per annum, depending on several factors such as the bank that provides the service or a particular property. Another important factor is whether the real estate market is primary or secondary.

The long-term rate is standard in accordance with the Eibor rate. Eibor is the bid rate on the interbank deposit market in the UAE. The standard or base rate varies from one bank to another, and the Eibor is fixed for most banks and is published by the Central Bank of the UAE.

For short-term rates, banks in Dubai provide fixed rates for a period of 1 to 3 years.

Banks with the most favorable rates

There are a number of banks in the UAE that issue mortgage loans to foreign citizens to purchase housing in Dubai. Below you can see a list of banks with the most favorable mortgage rates in the UAE:

• Abu Dhabi Islamic Bank;
• Abu Dhabi Finance;
• United Arab Bank.

MAXIMUM MORTGAGE AMOUNT

For non-residents of the UAE, the conditions are as follows: the maximum financing is up to 75% of the cost of housing that the borrower wants to purchase. He must pay at least 25% of the cost as a down payment.

WE WILL HELP YOU GET A MORTGAGE IN DUBAI

Are you still dreaming of buying an apartment or house in Dubai? If you contact our company, you will learn about the most popular areas in Dubai to buy real estate. Our specialists will tell you about apartments and villas and advise you on lending issues.

We are also ready to help you get a mortgage in Dubai, for example, to prepare all the necessary documents and provide them to the bank to consider a possible mortgage loan. Contact us right now and tomorrow you will be able to become the owner of real estate in Dubai!