Latest Market Report:
The UAE’s high-interest rates are causing more property buyers to opt for cash purchases over mortgages. In the UAE, interest rates increased by 1.75 percent in the first half of 2022. According to transactions by Dubai Land Department, mortgage transactions for around 31 percent of home purchases in H1 2022 were reported, as compared to 36 percent in H1 2021.
Experts believe there are more than 20 financial institutions offering over 2,500 mortgage products and rates in Dubai, which makes mortgage lending easy for foreigners. Banks can lend up to 70% of the property’s value for properties valued over AED5 million, and up to 80% for properties valued below AED5 million.
Borrowers can also fund extra transfer and agency fees up to 5% with some banks’ fee-based financing. Re-sale and investment properties in Dubai are limited to 60% loan amounts, while Dubai’s new construction properties are limited to 50%, regardless of their value, according to property experts in Dubai.
Are UAE banks also willing to finance down payments? Technically, not! Say, experts.
Are UAE banks also willing to finance down payments? Technically, not! Say, experts.
Unsecured personal loans in Dubai can be used to bridge funding gaps. But the rates are usually higher than those for mortgages. Payment terms are shorter, so they are not optimal for funding a down payment in UAE. The personal loans you take out in the UAE will also appear on your credit report, reflecting the fact they are a part of your mortgage affordability calculations. This might significantly reduce the maximum available mortgage amount as well, they added.
Eligibility Requirements For Mortgage Properties In Dubai:
If you meet the eligibility requirements, you can easily receive a home loan in Dubai whether you’re looking to buy an apartment, villa, or townhouse. Mortgages can be obtained in Dubai if you meet the following criteria:
- A resident or a national of the UAE
- A person aged between 21 and 65
- Earn at least AED 15K per month in salary or AED 25K per month in self-employment.
It is important to note that each bank may have a different minimum salary requirement for home loans in Dubai. There are some banks in Dubai that provide home loans to UAE nationals with incomes at least equivalent to AED8K per month, but your eligibility is largely dependent on the policy of the particular bank.
Can A Non-Resident Buy Mortgage Property In Dubai?
Dubai also offers mortgage options to non-residents. However, non-resident property buyers in Dubai have a limited choice of lenders since few banks offer home loans to them. Banks may have additional guidelines for mortgage eligibility, such as working for a particular employer or serving a minimum amount of time at the job, etc. The process of applying for a mortgage in Dubai also requires some paperwork. So, applicants for mortgages must first apply for them.
There are some designated freehold areas where ex-pat residents can buy a property in Dubai. Non-resident foreigners can also buy property in Dubai under certain conditions stipulated in the emirate’s law.
The Takeaway:
It is important to understand the process of Dubai mortgages when deciding whether to buy a property with cash or with a mortgage. Off-plan property mortgages in Dubai have a different loan cap. In Dubai, mortgages are more convenient than full cash purchases; they help you maintain cash flow liquidity.
The minimum cash down payment for mortgaged properties in Dubai is determined by the property’s purchase value as well as your residency status. To obtain the final offer mortgage letter usually takes around 2 weeks. An application for a Dubai mortgage pre-approval usually comes out within a week.
Looking to buy a property in Dubai on a mortgage basis? Contact Houzon today. We help you find your perfect home in Dubai along with the best mortgage rates possible to finance your property.