Essential Guide to Securing a Mortgage in Dubai for Expats and Residents

When buying a property in Dubai, financing is one of the first decisions you’ll face. If you’re considering an off-plan property, payment is usually handled in installments through the developer’s payment plan. Alternatively, you may pay in cash or obtain a mortgage for a completed property in Dubai.  For many, a mortgage is the most appealing due to the lower upfront costs and flexibility. Yet, with numerous mortgage providers and specific eligibility criteria, understanding how to get a mortgage in Dubai can seem overwhelming, particularly for first-time buyers.

In this guide, we’ll break down the mortgage process in Dubai into simple steps, covering types of mortgages and eligibility criteria to help you determine if you qualify for a mortgage loan.

Can You Get a Mortgage in Dubai?

The mortgage process in Dubai is straightforward, though specific criteria must be met. While foreign buyers are eligible for a Dubai property mortgage, most lenders require them to have been with their current employer for 6-12 months and meet minimum earnings thresholds. For self-employed individuals, evidence of running their business for at least two years, along with accounts and tax returns, is usually necessary.

Having a relationship with your bank can simplify the process, as they may be more willing to extend a mortgage if they’re already familiar with your financial situation. However, as each lender’s criteria vary, consulting a qualified mortgage broker who understands your specific needs can be incredibly beneficial.

Criteria for Mortgage Eligibility in Dubai

Whether you’re looking to purchase an apartment, townhouse, or villa, understanding the eligibility criteria is crucial in securing a mortgage in Dubai. Although requirements vary from bank to bank, the standard criteria include:

• Nationality and Residency: UAE Nationals and residents are eligible for mortgages. Non-residents can also qualify but typically face higher down payment requirements and fewer lending options.
• Age Requirement: Between 21 and 65 years old.
• Income Requirements:
  • For salaried employees: Minimum monthly income of AED 15,000.
  • For self-employed individuals: Minimum monthly income of AED 25,000.

Certain banks may lower these thresholds, especially for UAE Nationals, but requirements as low as AED 10,000 per month are rare.

Types of Mortgages Available in Dubai

Several mortgage types are available in Dubai, allowing flexibility to suit your financial goals. These are some of the primary types:

1. Fixed-rate mortgage: This type of mortgage offers a stable interest rate for a set period (typically 1-5 years), making it easier to budget with predictable monthly payments.
2. Variable-Rate Mortgage: Interest rates fluctuate with market conditions, making it ideal for those handling potential payment changes.
3. Discounted-rate mortgage: This type of mortgage starts with a lower interest rate for an introductory period, after which it reverts to the standard rate.
4. Offset Mortgage: Links your savings to your mortgage, reducing interest payments based on the savings balance.
5. Interest-Only Mortgage: You pay only the interest for a set period, with later payments covering both interest and principal.

Step-by-Step Guide to Securing a Mortgage in Dubai

Here’s a seven-step approach to streamline the mortgage process:

1. Prepare Your Documents: Have all necessary paperwork ready, including proof of income, bank statements, passport, and residency visa, to avoid delays.
2. Research and Find a Lender: Decide whether to work directly with a bank or through a mortgage broker to find the best mortgage product.
3. Get Pre-Approved: Obtain a pre-approval letter to confirm your borrowing capacity, helping you set a clear budget.
4. Start Your Property Search: With pre-approval, you can confidently search for a property within your budget.
5. Make an Offer and Negotiate: Once you’ve found a property, your real estate agent can negotiate the best price.
6. Choose Your Mortgage Product: Finalize your mortgage type and tenure, consulting a specialist to ensure the best fit.
7. Submit Your Mortgage Application: Submit your application and necessary documents to the lender after selecting your property and mortgage.
8. Complete the Legalities: With guidance from your real estate agent and mortgage advisor, sign the Sales and Purchase Agreement (SPA) and finalize the transaction.

Required Documents for Obtaining a Mortgage in Dubai.

While document requirements vary by bank, most lenders in Dubai require the following:

• Passport and visa copies
• Emirates ID copy
• Salary certificate or proof of employment
• Payslips and bank statements from the past six months
• Credit card statements
• Proof of current address, such as a DEWA bill or tenancy agreement

Understanding Mortgage Terms and Conditions

Before finalizing a mortgage, get acquainted with the following terms:

• Interest Rates: Fixed rates offer stable payments, while variable rates fluctuate with the market.
• Loan Tenure: Dubai mortgages typically last 15-25 years; a longer tenure means lower monthly payments but more total interest.
• Early Repayment Penalties: Confirm any early repayment fees, typically 1-3% of the outstanding loan.
• Loan-to-Value Ratio (LTV): Most Dubai mortgages offer 75-80% LTV, so you’ll need at least 20-25% for a down payment.
• Debt Burden Ratio (DBR): Your debt payments, including your mortgage, should be at most 50% of your monthly income.

Mortgage Costs in Dubai

When calculating mortgage costs, consider the following:

• Down Payment: A 20-25% down payment for expats is standard; UAE Nationals may have a lower requirement.
• Bank Processing Fees: Typically 0.5-1% of the total loan amount.
• Property Valuation Fees: AED 2,500 to AED 3,500 for a third-party valuation.
• Mortgage Insurance: Required by some lenders, based on the loan amount.
• Property Transfer Costs: The price includes a 4% transfer fee to the Dubai Land Department and a 2% agency fee.
• Admin Fees: Covers the paperwork and processing for your mortgage.

Conclusion

Securing a mortgage in Dubai doesn’t have to be stressful. You can confidently navigate the mortgage process by following these steps, meeting eligibility requirements, and working with experienced mortgage brokers and real estate agents. Whether buying your first home or adding to your investment portfolio, proper guidance and knowledge is crucial to a smooth and efficient experience.

Ready to secure Mortgage in Dubai? Contact SMS Consulting today at info(at)smsconsulting.me or via WhatsApp at +971 52 684 7121 for personalized guidance and a hassle-free business setup process.