If you’re an expatriate or an international investor looking for a great return on investment, Dubai should be at the top of the list. With its lively cultural scene, business-friendly atmosphere, and wealth of amenities, there’s no better time to invest in this booming Emirate. But what’s the average salary required to get a loan against property in Dubai? Let’s find out. But before that, let’s run past some basics.
What is a Loan against Property?
Loan against property for expatriates in Dubai, UAE is another option looking to invest their funds. A loan against property (LAP) is a secured means of borrowing money that uses your residential or commercial property as collateral. This type of financing is often used for expensive undertakings such as business expansion, weddings, debt consolidation, and home renovation.
Because it is backed by an asset — in this case, your property — lenders are more likely to approve loan against property applications and offer larger amounts than with unsecured loans. The loan size you’ll be approved for will depend on how much your property is currently worth in the open market. As a general rule, banks will extend funding equivalent to 50-60% of the appraised value.
How a Loan Against Property works
Expats who take out a loan against their property in Dubai use it as collateral to borrow money which can be up to 70% of the its total value. The purpose of this type of borrowing varies, from home renovations to business expansions or even debt consolidation or emergency funds.
Applying for a loan against property as an expatriate requires you to provide the lender with multiple documents, such as your proof of identity, employment certificate, salary slips, and bank statements. You will also need to pay an upfront fee in order to cover administrative expenses. The terms of repayment differ depending on size of the loan and interest rates offered by the lender.
Minimum and Maximum Salary Required to obtain Loan Against Property for Expats in Dubai
Non-residentials looking to take out a loan against their property must meet the minimum and maximum salary requirement, starting at AED 5,000 per month up to 100,000 per month or more. The actual amount varies depending on the type of loan and lender.
To be eligible for this loan, you must have been employed with a notable company for at least three years. Your credit score and history will also be considered, as well as any assets that can secure the loan (such as real estate). Lastly, You may also be asked to provide additional documentation to finalize the approval process, like bank statements or proof of income.
How much Loan Amount can You Borrow to Purchase Property in Dubai?
The amount you can take a loan to purchase a property in Dubai fluctuates depending on your eligibility and the property’s worth. If the purchasing price of a property is under AED 5 million, the maximum loan-to-value (LTV) ratio for an expat is 80%.
For those above AED 5 million, it decreases to 70% LTV. UAE nationals have a slightly higher chance, with 85% and 75%, respectively. Loan against property is one option that allows purchasers to buy a house with the help of a lender.
Impact of Loan Against Property on the Expat’s Financial Situation
When you take out a loan against your property as an expat, it will affect your finances. In general, the money you borrow will be more than what’s in your savings or investments. This could result in spending more monthly and needing help keeping up with those payments.
While we hope everything stays well, you must consider that if something happens to you and you could no longer make the monthly loan payments, many lenders would require a life insurance policy as part of the agreement.
Therefore, it’s crucial to consider how taking out a loan against your property could alter your finances before making any decisions. This will help protect you from any financial hardship that might occur while you’re paying back the loan.
A loan against property is a complex task for expats in Dubai. It is pivotal to understand the potential risks involved and weigh the pros and cons before taking out a loan against your property.
At Emortgage, we provide you with detailed advice and guidance to help you make the right decision. Our experienced mortgage advisors will take the time to explain all available options and help you find the best solution that suits your individual circumstances.
We make the process of applying for a loan against property as easy and stress-free as possible. We understand their financial situation and guide them through the loan process, so they can make informed decisions. With our expertise and advice, you can make the right decision for your specific needs. Get in touch with us today to get started.