OWNING A HOME WITH
AFFORDABLE HOME LOANS
Get Best Rate for Home Loan
What is Mortgage/ Home Loan In UAE
A mortgage is a type of secured loan offered by banks or other finance companies for the purchase of a residential or commercial property. The borrowers can get the loan by keeping the property as collateral to the loan finance company till the repayment of the loan.
UAE residents typically need to deposit 25% of the total value of the property and with the mortgage, they can borrow the remaining amount from a bank or Islamic Finance company. The borrower needs to pay back the loan amount along with the interest (as applicable), usually over 20 to 25 years.
The locals in UAE can get up to 80% mortgage (in some cases locals get up to 100% funding) and expatriates can obtain the mortgage up to 75% of property value. For under-construction properties, a 50% mortgage is allowed. Ready-to-move properties can get up to 75% mortgage. Mortgage for more than AED 5 million is allowed up to 65% for expats. When it comes to availing mortgage, you can choose between variable or fixed mortgage interest rates.
Mortgage in UAE is easily available to locals and expat borrowers seeking to buy or making investments in property. Both international and local lenders are offering home loans to property buyers.
| Mortgage | Minimum Salary | Flat Rate | Reducing Rate | Down Payment | Maximum Amount AED |
|---|---|---|---|---|---|
| ADCB Standard Mortgage Loan Expats | 15000 | 2.75% | 4.98% | 20% | 24000000 |
| ADIB Buy a House Expats | 10000 | 2.49% | 4.50% | 25% | 30000000 |
| Arab Bank Ready Property Loan | 15000 | 3.50% | 6.34% | 20% | 5500000 |
| CBD Mortgage Loan | 12000 | 2.49% | 4.52% | 25% | 20000000 |
| CBI Home Loan | 15000 | 3.49% | 6.33% | 25% | 10000000 |
| Emirates Islamic Manzili Home Finance | 15000 | 1.92% | 3.49% | 20% | 15000000 |
| Emirates NBD Home Loans for Expatriates | 20000 | 2.49% | 4.52% | 20% | 15000000 |
| FAB Home Loan | 15000 | 2.49% | 4.52% | 20% | 20000000 |
| HSBC Fixed-rate Home Loan | 15000 | 2.69% | 4.90% | 20% | 20000000 |
| Mashreq Home Loan | 15000 | 2.99% | 5.42%/td> | 20% | 10000000 |
| National Bank of Fujairah Home Loan | 15000 | 3.25% | 5.9% | 20% | 20000000 |
| RAKBANK Mortgage Home Loan | 15000 | 2.09% | 3.80% | 20% | 20000000 |
| Standard Chartered Saadiq Home Finance | 15000 | 1.99% | 3.60% | 20% | 18000000 |
| Sharjah Islamic Bank Residential Finance | 5000 | 2.75% | 4.99% | 20% | 800000 |
| United Arab Bank Home Loan | 20000 | 3.69% | 6.70% | 20% | 10000000 |
Features & Benefits of Mortgage Loans UAE
- The majority of banks in the UAE offer two types of mortgage loans- fixed and variable
- The deposit amount that the borrowers need to pay may differ, depending upon the specific property they want to invest in
- When the borrowers take the mortgage for purchasing a property, it’s a long-term commitment to pay back the capital and interest amount as fixed by the finance company
- Unlike personal loans, in a mortgage, the interest rate is lower and the tenure of the loan is also more flexible
- There is also an option of re-mortgaging the loan. Re-mortgaging involves the transfer of a mortgage from one lender to another. The borrower may opt for re-mortgage typically to reduce the loan EMI’s, pay the mortgage earlier, consolidate other short-term debts, etc
Types of Mortgage
Banks and other financial institutions offer different types of mortgages, as per the borrower’s preference and eligibility. However, before choosing a particular mortgage, you need to know about the types of mortgages available in the UAE.
Here are the standard mortgage types available in the region.
Fixed-Rate Mortgage
Variable Rate Mortgage
Discounted Rate Mortgage
Re-mortgage
What is difference between Fixed Rate and Variable rate in UAE Mortage
Fixed Rates
Key Aspects of fixed-rate mortgages:
- The interest rate is locked for a fixed period, so you don’t need to worry about fluctuation in interest rates.
- As the interest rate doesn’t tend to change, you can precisely calculate your monthly mortgage payments and manage budgeting more effectively.
- Having a fixed rate is a wise option with shorter-term mortgages, as you will have to pay the higher reversion after the end of the fixed period.
Variable Rates
Key Aspects of variable-rate mortgages:
- The variable-rate mortgage tends to fluctuate and you can’t determine exactly how much you need to pay as monthly EMI’s.
- It is better for medium and long-term mortgages. It helps you avoid the high reversion rate after the end of the fixed period.
- You can take benefit of any decreases in the bank’s base rate or the EIBOR rate.
Fees & Charges involved in Mortgage
When it comes to buying a property in UAE, you need to take a mortgage. There are several costs involved in taking a mortgage. The costs involved may differ depending on whether you are in Abu Dhabi, Dubai, and other emirates in UAE.
As far as a mortgage is concerned, there are various fees and charges involved such as bank valuation fee and bank arrangement fee. The bank valuation fee ranges between AED 2000 to AED 5000. Bank arrangement fee ranges from 0% to 1.5%. The fees applicable may differ depending on the bank. In Dubai, you need to pay a mortgage registration fee of 0.25% plus AED 290.
How to Apply For a Mortgage
Applying for a mortgage is simple and it may differ from one bank to another. In UAE, there are two distinct steps to apply for a mortgage.
Step 1: Approval in Principle
First, you need to obtain Approval in Principle, before applying for a mortgage.
Getting approval in principle helps you:
- Get an estimate regarding the amount you can borrow
- Valid up to 60 days
- Beneficial in the home buying process
- Won’t affect your credit score
To get Approval in Principle, you need to provide documents such as a valid passport, Emirates ID, and income statement.
Step 2: Apply for a Mortgage
To apply for a home loan, you need to be a UAE resident with an age between 21 to 65 years. Also, you must have a minimum monthly income of AED 15,000. You can simply fill out a mortgage application to apply for it.
What documents do I need to apply for a Mortgage in UAE
Here is the list of documents that you will need to apply for a mortgage in the UAE.
For UAE Resident:
- A copy of visa and passport
- Emirates ID
- Salary certificate
- Past 6 months’ payslips and bank statements
- Proof of residence (tenancy contract or DEWA bill)
- Credit card statement
For Non-UAE Resident:
- A copy of your passport
- Past 3 months’ bank statement
What is my eligibility to apply for a Mortgage
Whether you are seeking to purchase an apartment, villa, or townhouse, you can simply get a mortgage and own a property in UAE.
To apply for a mortgage, you are required to meet the eligibility criteria. Given below are the key points of eligibility you need to fulfill.
- A UAE national or resident
- Must be 21 to 65 years of age
- Monthly income of AED 15,000 (salaried) and AED 25,000 (self-employed)
The minimum salary required to obtain a mortgage may vary depending on the bank. Mortgage options are also available for non-resident property buyers.
What should I look for in the best mortgage
Buying a property usually requires taking a mortgage. Here are some useful tips that property buyers must consider towards choosing the right mortgage in UAE.
Key Factors
- Secure Down Payment
When it comes to buying a property, you need to make the down payment upfront and for the remaining property value, the mortgageamount is sanctioned. To make a down payment, you need to make enough savings so you can easily pay the down payment.
For expatriates, 20% down payment for the property purchase and 80% amount, you can get the mortgage.
You need to check your outstanding debts such as home loans, car loans, personal loans, loans on a credit card, etc. Banks usually assess this to determine how much amount you can afford to repay.
- Get your Documents Ready
Getting a mortgage requires you to complete the paperwork, as asked by the lender. Typically, it requires obtaining a copy of your Emirates ID, passport, visa, salary certificate, and bank statements. Some financial institutions may require other documents to verify your income sources and liabilities.
- Check your Credit Score
Before sanctioning the mortgage, banks usually carry out credit checks to ensure you can easily pay back your loan amount. A credit score reflects how well you manage your finances. Al Etihad Credit Bureau issues credit reports in the UAE. You may check your credit score from its official website before taking the home loan.
- Loan Tenure and Fees
In UAE, the maximum tenure for loan repayment is 25 years. When seeking the best mortgage, the interest rate is a key aspect.
A long tenure costs lesser monthly EMI’s. However, you need to pay more with high interest over the long term. Not only the interest cost, but you must also watch for setup, conveyancing and penalty fees, etc.
Do’s and Don’ts while taking Mortgage
Do’s:
- Accumulate Savings
You may open a recurring deposit scheme to ensure savings are accumulated each month into your RD account. It gives a boost to your credibility with the banks and they think that you can repay the loan on time.
- Restrict New Loans
If you take a mortgage to buy a home in UAE, you are advised not to take another loan within 1 year. However, it may impact your credit profile.
- Give Up Unused Credit Cards
Your credit score reflects the credit card limits and the limit that you utilize. If you have 4 credit cards but use only 1, the other 3 have no impact on your credit score. So, it’s better to return the credit cards that you are not using.
Don’ts:
- Choosing a Cheaper Rate
There are several instances when banks offer low-interest rates on loans. Even if you choose this low-interest rate, it is followed by much higher rates of interest. So, it’s going to be heavy on your pocket.
- Ignoring Credit Score
Most people usually ignore their credit scores. However, maintaining a good credit score is of prime importance, as lenders check your credit score and if you have a good credit score, the mortgage gets sanctioned.