In recent years, the United Arab Emirates (UAE) has emerged as a popular destination for expats, especially in areas like Dubai and Abu Dhabi, known for their business-friendly environment. Real estate experts and property agents in Dubai have observed a rising trend of expats choosing to settle down in the UAE, leading to an increase in the demand for housing loans. The mortgage industry in the country has recognized this trend and has seen a surge in the number of housing loans offered to expats by both local and foreign lenders.
According to property experts and real estate agents in Dubai, expats are choosing the United Arab Emirates more and more frequently, especially in business-friendly areas like Dubai and Abu Dhabi. The well-established mortgage industry in the UAE, which acknowledges this trend, sees an increase in the number of housing loans offered to expats by foreign and local lenders.
Getting a loan in the UAE
Foreign buyers in the United Arab Emirates are able to get a mortgage, but they must meet certain criteria. You must have been employed at your current employment for at least six months or a full year, depending on the area and the lender’s requirements while shopping for properties for sale in Dubai. Self-employed borrowers must have been in operation for at least two years. If you already have a relationship with the bank, this can be helpful because it will be aware of your circumstances. One of the biggest systemic abnormalities is that some banks would exclusively hire people who worked for specific companies.
However, if your employer is smaller or less well-known, you can have problems acquiring a loan from some lenders even if you have strong credit. Having a solid credit history is also important because lenders frequently reject applicants with poor or nonexistent credit histories. In light of this, you should hold off on applying for a mortgage until you have reviewed your credit report and corrected any problems before looking for mortgage services in Dubai. If you don’t have any credit history, you can consider acquiring a credit card and using it responsibly every month to build one.
Mortgage products available in the UAE
Mortgages are available in the United Arab Emirates with either fixed or variable interest rates. Fixed periods are frequently five years or greater, though they could be as short as one year. At the end of the set period, the agreement changes to the bank’s variable rate. Although fixed-rate mortgages give you certainty regarding the size of your repayments for a defined period of time, variable-rate mortgages are still worth considering if interest rates seem to be lowering. The period of the loan is normally 25 years, and repayment is required before the borrower is 70.
Mortgage rates in the UAE
Mortgage rates may differ significantly depending on the lender, the property, and your financial status. These are the most affordable pricing, however, you can have to pay considerably more. As more buyers have opted to buy homes directly from developers using payment plans rather than mortgages, the UAE mortgage market has stagnated in recent years. Mortgage rates in the UAE may alter a lot over time depending on the country’s economy and the price of oil.
What is the maximum mortgage loan amount in the UAE?
An expat must put down a deposit of at least 25% in order to acquire a residence up to AED 5 million. If you want to invest in real estate and rent it out, you will need a buy-to-let mortgage, which requires a much larger down payment of between 40 and 50 percent. There are many methods for limiting borrowing. You cannot borrow more money (with interest) than your estimated earnings overall over the next seven years.
The limits on mortgage payments in Dubai is generous at 50% of your monthly salary, in contrast to the restrictions of 30% or 35% imposed in other European countries. When you apply for a mortgage, banks could need you to have a higher income than a local applicant because some lenders consider foreigners to be a riskier alternative.
How to apply for a mortgage in the United Arab Emirates?
To apply for a mortgage, you can either go to the banks directly or see a mortgage broker. In places like Dubai and Abu Dhabi, comparison websites let you compare offers from various lenders. A mortgage broker can be of great assistance to overseas borrowers. They will be able to help you navigate the quirks of the local market and find the greatest deal for your requirements. Mortgage applications are normally processed in the United Arab Emirates within a few weeks.
Getting a general idea can be helpful prior to completing a thorough application. Before you’ve even identified a property, the bank will generally approve your loan if you have an agreement in principle. As a result, you are now able to make an offer on a home with confidence that it is within your price range.
Documents required in the United Arab Emirates to apply for a mortgage
The papers you’ll need to apply for a mortgage may alter depending on which bank you choose. You can be requested for a copy of your passport, proof of your current address and United Arab Emirates residency, and financial documents like your tax return, bank statements, or proof of your salary.
Mortgage payments in the UAE
A repayment mortgage is the most typical type of mortgage in the UAE. Under these arrangements, a set monthly payment is made for the duration of the mortgage term. You often set up a direct debit from your bank account to pay on the same day each month. Few people have interest-only mortgages. They entail just making interest payments each month and requiring repayment of the entire principal sum at the conclusion of the period. Due to the risk involved, these loans often have terms of only five years.