In the UAE property market, mortgages are still a relatively new notion. Although mortgages are becoming more frequent in the property-buying process, there is still a lack of information and tools available. If you’re looking for a one-stop-shop for your mortgage needs, Mortgage Finder, the UAE’s largest mortgage consultancy and the regionally acclaimed Property Finder Group, is there for you. With Mortgage Finder, we are able to provide you with the finest possible mortgage (Home Loan) guidance, making our service even more complete.
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However, how does the UAE mortgage procedure work? We’ve put together a comprehensive guide on how to get a mortgage in the United Arab Emirates and buy the house of your dreams.
Mortgage (Home Loan) Process in Dubai: How to Get A Mortgage in UAE?
1. Who can Get A Mortgage in the UAE?
Non-residents of the United Arab Emirates, as well as UAE natives, can apply for a mortgage if they want to buy a home, business, or even a plot of land.
2. How Do I Apply for A Mortgage in the UAE?
It’s critical to know how much you qualify for in advance of applying for a mortgage. Use an online amortization tool to get an idea of your monthly mortgage payments depending on the price of your house, interest rate, and loan length (a maximum of 25 years in the UAE). The Mortgage Finder website and the Dubai Land Department’s official website both have mortgage calculators.
Expatriates and non-residents acquiring a home valued at less than AED 5 million are required to make a down payment of at least 20% of the property’s worth per UAE Central Bank regulations (it is 15 percent for UAE nationals). 30 percent is required for homes exceeding AED 5 million (25 percent for UAE nationals) and 35 percent for second or subsequent property purchases, depending on the type of financing. In rare cases, banks will allow you to roll some of the purchase fees into your loan, allowing foreigners to acquire a loan-to-value ratio (LTV) of up to 84.8 percent, while the LTV for UAE residents rises to 90.1 percent.
Regardless of the property’s worth, a 50% down payment is required for all off-plan purchases.
Obtaining pre-approval for a loan is the next step after determining how much money you’ll need and how much you can afford to pay.
3. What is Pre-Approval?
A pre-approval is just a bank’s official declaration that they’ve studied your application and are prepared to loan the amount you’ve requested. Your preferred bank will tell you of your pre-approval in the form of a letter or an email that is valid for 60 days.
Pre-approval gives you peace of mind as a buyer. You can continue looking for a home until you discover the right one, confident that obtaining financing for it will not be a problem after you’ve found it. Selling with the knowledge that the buyer has received pre-approval gives sellers the assurance they need to move forward with a sale.
The small print is critical when it comes to bank services, so be sure to read all of the fine print before signing any agreement.
4. What Paperwork is Required to Obtain a Mortgage?
Depending on your specific situation, the amount of papers necessary may differ slightly. The following documents are typically required for UAE nationals and expats:
- Copy of passport, visa, and Emirates ID
- Proof of employment in the form of a salary certificate
- Bank statements and pay slips from the past six months
- Most recent credit card statements
- Proof of address – either a tenancy contract or a copy of DEWA bill
Documentation requirements are even simpler for non-residents, and include the following:
- Copy of passport
- Past three months of bank statements
5. How Long Does the Whole Process Take?
Pre-approval will typically take three to four business days, and then it will take an additional week to receive the mortgage offer letter from the bank after the transaction has been finalized. The timing will, of course, be determined according to the completion of any extra procedures or papers that may be required.
In a nutshell, this is the procedure that must be followed in order to obtain a mortgage in the UAE. Of course, there is a possibility that there will be additional, less significant processes or expenditures involved along the road. Before you apply for a mortgage, it is in your best interest to have a conversation with a reputable mortgage broker, such as Mortgage Finder, in order to gain a better understanding of the process and the various alternatives available to you.
Mortgage Finder was kind enough to provide information on the pre-approval procedure as well as the documentation that is required.