Equity release (also known as loan against property here in Dubai) is a term used when you borrow a large sum of money from a lender and put your property up as collateral. It’s a great way to release the cash tied up in your home, and expats across the city can take advantage of this service.

A loan against property is a common and popular method of leveraging the monetary value of a home all across the world, and it’s one of the cheapest ways you can borrow money. UEA residential expats can borrow up to 75% against the value of their home, and once the funds have been released, it’s yours to do as you wish with.

If you’ve considered releasing the value tied up in your property, we have detailed the benefits of equity release for expats in Dubai below, alongside all the relevant information you need to get started.

The Benefits of Equity Release

Equity release has many advantages, and can help you live the lifestyle you’ve always wanted in Dubai. Some of the biggest benefits of loan against property include:

You Release the Value of Your Property Without Having to Leave

Some people see home equity release as selling their property, but it’s a highly inaccurate view to take. When you release equity, you’re freeing up the capital tied up in your property. You have the right to live there for as long as you want, and the lender cannot remove you.

Not only do you not have to leave your home, it can still be left to your beneficiaries as part of their inheritance. There are different options available when you take out a loan against property, and a lifetime mortgage will secure a portion of your property’s future value for your loved ones.

Tax-Free Cash Available for any Purpose

Once the funds have been released into your bank account, you can use the money for any purpose you require. The equity you release is also tax-free, so you don’t have to worry about losing a share of the money in tax payments.

Many people use the funds for:

• Paying off their mortgage / debts
• Home improvements
• Financial stability
• Paying for their children’s or grandchildren’s education
• Purchasing a second property in Dubai as an investment
• Cash flow for other business ventures

Low Interest Rates

As you’re putting up your property as collateral, equity release gives you the opportunity to borrow a higher amount of cash at a lower interest rate. In general, other personal loan options will have higher interest rates, but it’s always best to double-check first to make sure the loan you’re taking out works in your favour.

With a loan against property, you also have the flexibility to decide on the tenure of your loan. In most cases, equity release loans in Dubai will be between 5 and 25 years. A longer loan can mean the amount of interest you have to pay back each month is less, which in turn means you put less financial pressure on yourself.

Before agreeing to any loan option though, it’s best to discuss the choices available with an independent advisor first. This way, you can be sure that the loan you’re taking out is the right one, and that there is a good balance between the length of your loan and the repayment plans.

Am I Eligible for Equity Release?

While home equity release is often associated with over-55s, anyone can apply for a loan against property in Dubai provided you are at least 21 years of age. There is a range of criteria you have to meet, but it’s rare for an individual to be deemed ineligible. Factors that will be addressed include:

Your Credit Score

Money lenders in Dubai will look at your credit score to assess your history of loan repayments, much like they would back in the UK. A high credit score improves your chances of securing a loan, while a low credit score can make things a touch more difficult.

Your Source of Income

Even with your property up as collateral, banks and other lenders will need to be certain that you’re financially stable enough to repay the loan as outlined in your intended agreement.

If lenders don’t think you can meet their terms, you may not reach an agreement or they may insist on making some changes. This is why you should meet with an independent advisor first to discuss the equity release options that will work well for you.

It should be mentioned that retirees, employees and the self-employed can all take out a loan against property. Lenders do not discriminate about the source of your income as long as it is stable.

For most residential expats in Dubai, a starting salary of AED 20,000 will suffice to take out a loan

Legal Ownership of the Property

As you can imagine, the banks of Dubai take a risk every time they approve home equity release, so you will need to prove you’re the legal owner of the property in question before they can release funds.

You should have all the necessary documents to hand (which we will discuss below), and if you are a co-owner of the property, the other co-owners will have to agree to the terms, too.

What Documents do I Need to Release Equity?

Everyone in Dubai who wants to take advantage of equity release options will need to present lenders with the following documents:

• Title deed
• Building plan
• Registration documents
• Approval documents from relevant authorities

As an expat, you will also need to present:

• A copy of your passport
• A valid residence visa

If you are an employed individual, you may also need:

• A salary certificate
• Your latest pay slips
• Your bank statements for the last six months

Self-employed individuals could require:

• A copy of your valid trade license
• A Memorandum of Association
• Your bank statements for the last six months
• A financial audit going back at least two years

Reaping the Benefits of Equity Release Options

Equity release gives expats in Dubai greater freedom to enjoy their lives in the way they see fit, so it’s no wonder getting a loan against property has proven to be so popular.

However, there are many different equity release options available, and it helps to have an independent expert by your side to help you find the right product for your needs.

To discover the benefits of equity release for yourself, contact the Expat Mortgage team to make sure you get the best deal. We will approach the banks on your behalf to negotiate the most favourable interest rates, taking all the hassle away from you.