How to Get a mortgage in Dubai – Full Guide

How to Get a mortgage in Dubai - Full Guide

How to Get a mortgage in Dubai – Full Guide

The UAE offers a wide range of mortgage products that cater to the needs of both local and foreign buyers. Banks in the UAE offer fixed, variable, and Islamic mortgages. Mortgage products are usually available for properties located in Dubai, Abu Dhabi, and the Northern Emirates.

However, some banks also offer mortgages for properties located in other emirates such as Ajman, Umm Al Quwain, and Ras Al Khaimah. The amount that can be borrowed and the interest rate will depend on the buyer’s nationality, employment status, salary, and property type.

Should you buy property in the UAE?

If you are an expat looking to purchase a home in the UAE, there are a few things you should know. First, you will need to pay an estate agent and? municipality fee, which is 2% of the purchase price. You may also need to pay a developer fee of AED 5,000 for new homes. 


Secondly, it is important to consult with a legal advisor to avoid any delays or unexpected costs. Finally, be sure to budget carefully as purchasing a home in the UAE can be costly. The cost of purchasing a home in the UAE can be expensive, but with careful planning, it is possible to find an affordable option that meets your needs. Be sure to consult with a legal advisor and budget carefully to avoid any unexpected delays or costs.


Who can get a mortgage in the UAE?

Getting a mortgage in Dubai requires that you have been employed for at least six months, and this this can be a year if you are looking to buy in a specific area. If you are self-employed, then you will need to have been running your business for at least two years. 


Another thing that can help your application is if you already have a relationship with the bank; some will only accept applicants who work for specific companies. Checking your credit file and repairing any issues before you apply is a good idea, as is building up a credit history if you don’t have one already by taking out and paying off a credit card each month.


Types of mortgages in the UAE

There are two types of mortgages available in the UAE: fixed-rate and variable-rate. Fixed-rate mortgages have a set interest rate for a specific period of time, usually five years. At the end of the fixed term, your mortgage will switch to the bank’s variable interest rate. This type of mortgage gives you the benefit of knowing exactly how much your monthly repayments will be. 


However, if interest rates look like they might fall, you may want to consider a variable-rate mortgage instead. These mortgages typically have a term of 25 years, and you will need to repay the loan before the age of 70.


Mortgage rates in the UAE

The rates for mortgages usually depend on the economic situation of the country and oil prices. However, lately, the rates have begun to stabilize. As of August 2022, the rates start at 2.75% on a one-year fixed rate. The rates go up to 3.89% for three years or 3.99% for five years. These are the lowest rates on the market currently. Depending on the lender, property, and your financial circumstances, you may have to pay considerably more.


How much can you borrow for a UAE mortgage?

In order to take out a residential loan to buy a property in Dubai as an expat, you will need a deposit of at least 25% if the property is worth up to AED 5 million. If the property is more expensive, then a deposit of at least 35% will be required. Borrowing is capped at 50% of your monthly income, which is more generous than in some other countries. Expats may be considered a higher risk by some banks, however this is not a major roadblock when it comes to  owning a property in Dubai.


How to apply for a mortgage in the UAE

A mortgage broker can be of great help for expat borrowers, they are professional who helps borrowers find the best deals on mortgages. In the UAE, they can be extremely helpful due to their local market knowledge. The process usually only takes a few weeks. Banks can also be approached directly, or comparison websites can be used to compare deals from different lenders.


Mortgage agreements in principle

An agreement in principle is a decision by the bank to lend you a certain amount of money before you have found a property, which gives you peace of mind when making an offer on a home. Applying for an agreement in principle is often quicker and easier than making a full application. The key benefit is that it allows you to know your budget before finding a property.


Documents to get a mortgage in the UAE

To apply for a mortgage, you will need to provide some basic documentation. This can include your passport, proof of residency, current address, and financial documents such as proof of salary or bank statements. Having these items ready will help make the application process go more smoothly.


Mortgage costs in the UAE

A fee of 0.25% of the mortgage balance is charged by the lender to register the loan. In addition, the valuation fee and payment for mortgage protection insurance may be required by the lender. These fees vary depending on the lender and type of mortgage. Comparing these fees is important before taking out a mortgage in the UAE.


Property insurance in the UAE

In the United Arab Emirates, it is mandatory to have insurance for your home if you have a mortgage. The amount you pay for your insurance policy will be based on the value of your property and belongings. Typically, your yearly premium can be around 0.1% of the combined value of your property and contents. You can choose to purchase buildings and contents insurance separately or as a package. While contents insurance is not required, it is something to think about if you want to be fully protected in the event of any damages or losses.


Mortgage repayments in the UAE

With a repayment mortgage, borrowers are required to pay a fixed amount each month for the duration of the mortgage term. This payment usually goes directly into a bank account via direct debit on the same date each month. Interest-only mortgages, which only require the interest portion to be paid each month with the full principal due at the end of the term, are less common but may be an option for some borrowers. These loans are often only available with terms of five years or less because they are considered risky.


Refinancing a mortgage in the UAE

The mortgage market is becoming increasingly competitive, driving banks to offer more attractive deals on home loans. This makes it a good time for homeowners looking to switch deals. People who already have a mortgage are usually able to get the best offers, so they should approach their current bank first. Some lenders may be willing to reduce the interest rate on the loan for a fixed term. However, there will usually be a fee charged for remortgaging, which has been capped at 1% of the balance (up to AED 10,000) by the rules introduced in December 2015.


How Emortgage Can Help You

We understand that taking out a mortgage is a big decision. Our expert team is on hand to guide you through the process and find the best deal for your individual circumstances. We can help with everything from getting an agreement in principle to comparing mortgage rates and fees. Contact us today to see how we can help you.