Can an expat get a mortgage in Dubai?

  Buyer's Guide

Expat borrowers who are interested in buying property or investing in real estate can easily obtain mortgages in the United Arab Emirates (UAE). This useful guide will explain what steps you need to take in order to climb the ladder of success in the real estate market there.

The United Arab Emirates have emerged as a preferred location for expatriates in recent years, particularly in regions that are conducive to economic activity, such as Dubai and Abu Dhabi.

As a response to this pattern, the real estate mortgage industry in the UAE has matured to the point where both domestic and international financial institutions can now provide house loans to expatriates. Although the requirements for residential and buy-to-let mortgages differ, foreign nationals currently residing in the UAE have access to both types of mortgages.

When one does not have the necessary funds to make a down payment on a piece of property outright, one can take out a mortgage or home loan from a financial institution. Home financing or home loan is the same thing in the United Arab Emirates.

In addition, you pay this sum on a monthly basis in addition to the interest rate set by the bank or lender.

A home’s price determines the minimum required down payment on a mortgage. Nonetheless, the standard down payment for an expat is 25% of the overall unit price.

Should Expats Invest in Real Estate in the United Arab Emirates?

There are millions of expatriates living in the UAE, but many of them still opt to rent rather than buy a home there. This could be because they are unsure of how long they will be living in the UAE or because of the costs associated with buying a property.

In the United Arab Emirates (UAE), apartments and houses can be purchased by foreign buyers in certain regions that have freehold developments. Buying a brand-new home off the plan from its developer is something that a lot of foreigners do. Typically, this entails making an initial deposit of ten percent of the total price, followed by additional payments at predetermined intervals while the building is being constructed.

Because timescales aren’t always dependable and delays can be typical, it is essential to seek legal counsel before pursuing this course of action.

It is possible for the price of acquiring a home in the UAE to become quite expensive. As a transfer charge, you will be required to pay the real estate agent 2% of the purchase price in Abu Dhabi, in addition to paying the municipality 2% of the purchase price. In addition, a fee of 5,000 AED must be paid to the developer for any new construction dwellings.

Fees in Dubai are comparable to those in other countries, consisting of a 2% payment to the Dubai Land Department (the seller also pays 2%), and a 2% payment to the estate agency.

Can a foreigner get a mortgage in UAE?

Mortgages are available to buyers from other countries in the United Arab Emirates, but they must first satisfy a number of requirements:

  • You will need to have been working at your current job for a minimum of six months or a year, depending on the rules of the lending institution in the area in which you plan to buy a home.
  • Borrowers who are self-employed will need to demonstrate that they have been operating their business for a minimum of two years. Having a relationship that is already established with the bank can also be advantageous because the bank will be familiar with your situation.
  • The fact that some banks would only accept candidates who work for particular companies is one of the most peculiar aspects of the application process. If you work for a government agency, a financial institution, or a multi-national corporation, it is quite unlikely that you will run into any difficulties as a result of this.
  • Even if you have excellent credit, you may have trouble obtaining a loan from some creditors if the company for which you work is relatively new or of a modest size.
  • When asking for a loan, it is crucial to have a good credit history because lenders have a tendency to turn down applicants who have weak credit files or who have no credit files at all. Because of this, you should wait to apply for a mortgage until you have reviewed your credit report and addressed any problems it may include before doing so.
  • If you have never had credit before, one option for establishing a credit history is to apply for a credit card and make it a habit to pay off the balance in full every month.

Types of Home Loans or Mortgage in the UAE

In the United Arab Emirates, there are many different kinds of home loans, and they all have different interest rates. The interest rate is the primary and most important factor that you should consider when deciding whether or not the deal is a good one.

Fixed Rate Mortgage

It’s the most fundamental one, in which you and the lender come to an understanding about the interest rate ahead of time and settle on a precise percentage.

Because it won’t be affected by any future situations, it’s a wonderful alternative to go with; as a result, you’ll be able to determine the exact amount that you’ll have to pay in each instalment during the entire period without any variation.

Variable Rate Mortgage

This type features an interest rate that is subject to vary, as the name of the product suggests. It varies depending on the market or any new restrictions that come into effect.

It is impossible to forecast whether there will be a decline or an increase, thus it is a risky alternative. Just make sure that you are not in a precarious financial situation before selecting this one so that you can afford any increases.

Capped Rate Mortgage

This one is somewhat like to the Variable Rate Mortgage in that the interest rate is not set in stone; however, before the loan period begins, you and the lender agree on a maximum interest rate that will apply to the loan.

No matter what happens in the market, the maximum allowable interest rate won’t be exceeded. This has been agreed upon in advance.

Discounted Rate Mortgage

In this scenario, the borrower will provide you with a discount in the form of a specific dollar amount and percentage during the first few months of the loan term.

If you do not consider the amount that you will have to pay once the promotional period is over while making your choice regarding this type, then you will be faced with a challenging alternative.

Remortgage

In the event that you have already applied for a loan and you require additional funding while the loan is still active, this form of loan is ideal for you.

Offset Mortgage

With this brand-new feature, you’ll have the ability to link your credit, savings, and loan accounts together. As a consequence of this, anytime you add additional funds to any of the accounts, the overall amount of interest is reduced, and vice versa.

Types of Home Loans or Mortgage in the UAE
Home Loans UAE

How to Find the Lowest Interest Rates on a Mortgage in the UAE?

UAE mortgage lenders and banks that welcome expats

While there are more than 30 financial institutions in Dubai, not all of them will lend to foreign nationals or expats. To conduct business in the UAE, a foreign lender must first be approved by the country’s central bank.

Unauthorized individuals are unable to secure a mortgage on a property’s title deed. It also implies the bank can’t take back the property in the event of a default.

Among the most prominent UAE-based lending institutions that welcome expats are:

HSBC is a multinational financial institution that provides mortgages to borrowers with annual incomes of at least AED 15,000. Only certain constructions have mortgages available. You can overpay by a minimum of AED 30,000.
Mashreq is a financial institution in the United Arab Emirates (UAE) that provides loans to both locals and foreigners. Expat residents who are employed or self-employed and who earn at least AED 15,000 per month are eligible for mortgage loans of up to AED 10 million.

Emirates NBD is a government-owned bank that provides mortgages of up to AED 15 million. Pre-approval is offered in addition to mortgages with a loan-to-value of up to 75%.

Mortgage Loan Agreement

What Documents You Need to Get a Mortgage in Dubai?

To apply for a home loan in the UAE as an expat, you should have the following documents ready:

  • A copy of your paycheck
  • Your passport copy
  • A sign that you live in the United Arab Emirates.
  • A statement from your bank from the last 3 or 6 months
  • A proof of where you live now
  • A trade licence is for people who own a business.

How to Apply for a Home Loan in the United Arab Emirates?

In the UAE, it’s easy to apply for a loan to buy a house. Just follow these steps:

  • You can choose to work with a bank directly or through a broker.
  • Choose the type of mortgage that works best for you.
  • Get a mortgage agreement in principle or a letter showing that they are willing to work with you.
  • Find the prperty you want and get the best deal on it.
  • When you agree on a price, pay the deposit to confirm the sale and the date it will be finished.
  • By the end date, the bank or loan provider will pay the amount.

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