Unlocking Homeownership: Navigating the Mortgage in Dubai Process

  • 11 months ago
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Mortgage in Dubai: Your Path to Homeownership

Introduction

If you’re considering buying property in Dubai, applying for a mortgage can be a beneficial option that offers greater financial flexibility. At Milestone Homes Real Estate, the top real estate company in Dubai, we understand the importance of finding the right mortgage for your dream home.

Who Can Qualify for a Mortgage in Dubai?

Whether you aspire to buy an apartment, villa, or townhouse in Dubai, you can secure a home loan if you meet the eligibility criteria. To apply for a mortgage in Dubai, you need to be:
  • A UAE national or resident
  • Aged between 21 and 65
  • Have a monthly income of AED 15K (salaried) and AED 25K (self-employed)
Home loan in Dubai can vary among banks, so it’s essential to research individual bank policies. Non-residents can also explore mortgage options in Dubai, but their choices may be limited as only a few banks cater to non-resident property buyers.

Required Documents for Obtaining a Home Loan in Dubai

To initiate a mortgage application in Dubai, you will need to provide the following documents. While the requirements may slightly differ from one bank to another, these are the standard documents:
  • Identity
  • Income and employment
  • Assets and debts
  • Credit history
  • Rental history
  • Other information, such as divorce, bankruptcy or gift funds
For non-residents applying for a home loan in Dubai, the documentation requirements are more straightforward:
  • Identity
  • National ID
  • Proof of address, such as a bank statement or utility bill
  • Additional documents, subject to qualification status, local laws and regulations.

Step-by-Step Process to apply for a Mortgage in Dubai

Step 1: Find a Lender

In Dubai, home mortgages are sourced through banks and must be registered with the Dubai Land Department (DLD) for legal validity. You can either approach your bank directly to explore their mortgage deals or enlist the services of a mortgage broker who can assist in finding the best mortgage loan in Dubai.

Step 2: Choose the Right Mortgage for You

Dubai offers various types of mortgages, including fixed-rate and variable-rate options. Consider factors such as your lifestyle, the type of property you desire, the loan amount you need, and the cash deposit amount you can manage. Many banks provide online mortgage calculators to help you estimate your monthly installments based on the applicable interest rate.

Step 3: Get a Pre-Approval Letter

A pre-approval letter is a crucial step in the mortgage application process. It’s an official document issued by the bank, indicating your eligibility for housing finance. It outlines the maximum borrowing limit allowed and offers certainty in obtaining a home loan. With our ADCB Dream Home initiative, pre-approvals are now instant, saving you time and effort.

Step 4: Find Your Dream Home

Once you have a budget and a pre-approval letter, begin your search for the perfect property. Pre-approval letters are usually valid for 60 to 90 days, providing ample time to find your ideal home.

Step 5: Finalize Your Property Purchase

After finding your desired property, reach out to your bank to finalize the loan agreement. The bank may send a property evaluator to determine the property’s value and help you make a fair offer. Once the price is agreed upon, pay the deposit, and set a completion date for the purchase transaction. On the final day of property transfer, the bank will release your loan amount to the seller, making you the proud owner of the property.

FAQ’s

As of January 2023, the mortgage rates in the UAE vary depending on the type of mortgage you choose. The 3-year fixed rates are currently as low as 4.99% for the next 3 years. Opting for a fixed-rate mortgage now can provide stability and protection against potential rate fluctuations for the specified period.

As of the current period, the following are some of the fixed-rate mortgage options available in the UAE:
  • 2 Year Fixed Fee Saver: 6.54% fixed interest rate, 7.1% APRC (Overall cost for comparison).
  • 2 Year Fixed Standard: 6.24% fixed interest rate, 7.1% APRC.
  • 3 Year Fixed Fee Saver: 6.24% fixed interest rate, 7.0% APRC.
  • 3 Year Fixed Standard: 6.04% fixed interest rate, 7.0% APRC.
Please note that mortgage rates can vary among different banks and lending institutions, so it’s essential to explore multiple options to find the best fit for your financial requirement.

In Dubai, the mortgage percentage, also known as the loan-to-value (LTV) ratio, varies based on the applicant’s residency status. For UAE nationals, the mortgage amount can go up to 85% of the property price, while for expatriates, the maximum loan percentage is 80%. This means that UAE nationals can finance up to 85% of the property’s value through a mortgage, while expatriates can finance up to 80%.

For first-time property purchasers in the UAE, the Central Bank requires a minimum down payment of 20% of the property’s value for expatriates (15% for UAE nationals) in addition to related costs. If you are an expatriate or non-resident buying a property valued below AED 5 million, you would need to pay at least 20% of the property’s value as a down payment (15% for UAE nationals).

In the UAE, the maximum loan period allowed for mortgages is twenty-five years. However, this may vary depending on the bank’s policies and your age. Typically, the age limit for salaried individuals is 65 years, while self-employed individuals may have an age limit of 70 years. A longer-term mortgage can lead to lower monthly payments but may result in higher total interest over the loan tenure. Additionally, opting for a longer-term mortgage may increase your borrowing capacity.

Conclusion

At Milestone Homes Real Estate, the top real estate company in Dubai, we strive to make your home-buying journey as smooth as possible. Applying for a mortgage in Dubai can be a strategic move that opens doors to homeownership while preserving financial flexibility. By following the step-by-step guide provided in this blog, you can navigate the mortgage application process with ease and secure your dream home in Dubai. Take the first step towards homeownership today!

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