How To Buy A Property In Dubai On Mortgage?

How to buy a property in Dubai on mortgage?

The thought of buying a property in Dubai can be exciting but the process can become daunting, if you start it without learning about the key steps. The reasons to invest in Dubai real estate can be many such as its impressive ROIs, tax-free rental yield, or lifetime investments in order to live there and enjoy the most premium facilities. Anything is justified because Dubai real estate is one of the most regulated, seamless, transparent, and promising markets and it offers a peaceful lifestyle to the residents.

The UAE government has introduced several buyers’ protection laws – to make the real estate sector attractive for foreign investors and to make them feel secure about their investment. Now, when you are sure to purchase property in Dubai, you must look for a suitable option but before starting the search, the first and foremost important step is to decide your budget to buy a property.

How to buy a property in Dubai?

Buying a property is always one of the biggest purchases in a person’s life, so before making such a huge commitment – you must be sure about your decision. Once you have decided to invest in Dubai real estate, you can either buy a property with cash or a mortgage. The cash purchases are preferred due to being cost-effective, but the mortgage offers flexibility in terms of paying off loan, while managing your finance.

Now, if you want to buy a property in Dubai on the mortgage, you must know how it works, who can get this loan and what documents you will need to avail this opportunity.

Who can buy a property in Dubai?

Anyone can buy a property in Dubai – whether you are a UAE national, an expatriate, or a foreign investor.

Where can expats buy a property in Dubai?

As an expat, if you are currently living in the UAE, you can buy:

  • A leasehold property
  • A freehold property in the freehold areas in Dubai including Al Barsha South, Dubai Marina, Palm Jumeirah, and Emirates Hills to name a few.

Who can apply for a mortgage in Dubai?

Expats can purchase a property in Dubai on mortgage. You can also apply for a mortgage, if you are:

  • A UAE national or resident
  • Aged between 21 and 65 years
  • Monthly income of AED15,000 (salaried), and AED25,000 (self-employed) and more.

Key requirements to avail a mortgage in Dubai

Another interesting feature is that the requirement of minimum salary to apply for a mortgage in Dubai varies from bank to bank. Some lenders allow the UAE nationals with a minimum monthly income of at least AED8,000 to apply for a home loan in Dubai.

Similarly, the upper-age limit also varies from bank to bank, depending on a particular bank’s policies.

The term for which the loan is issued cannot be more than 25 years and the loan amount cannot exceed 90% of the total value of the given property.

Required documents to obtain a mortgage in Dubai

Before applying for a mortgage in Dubai, certain documents are required to complete the paperwork before processing the mortgage application. Mostly commonly asked documents are:

  • A copy of valid passport and visa
  • A copy of Emirates ID
  • A salary certificate as proof of employment
  • A photocopy of the residence permit (the tenancy contract or DEWA bills)
  • Copies of bank statements for the last six months
  • Credit card statement (if any)
  • Proof of additional income (if any such as rent)

What are the borrowing limits?

If you are an expat first-time buyer, you can borrow up to 80% of the total value of the property – on properties worth less than AED5 million. The UAE nationals can borrow up to 85% of the property value – on properties worth less than AED5 million.

For properties worth more than AED5 million, the borrowing limit decreases to 65% for expats and 70% for the UAE nationals.

Down payments

For properties worth less than AED5 million, expats will have to pay a 20% down payment, while the UAE nationals can pay 15%.

For properties worth over AED5 million, expats are required to pay 35% and the UAE nationals can pay 30% as a down payment.

How to obtain a mortgage in Dubai?

Now the question arises that how can you buy a property in Dubai on the mortgage? Let’s break it down into a step by step procedure.

Find a lender

The banks sanction home loans in Dubai, so in order to apply for a mortgage – you can either directly contact bank representatives or approach the bank through mortgage brokers. Every bank offers a different mortgage and to crack the best available deal, the real estate experts suggest working with a mortgage broker.

Having a mortgage broker on your side is a great idea as they are financial experts, can better evaluate your financial health and help you get the right deal to match your circumstances.

Note: The home loans must be registered with the Dubai Land Department (DLD) to obtain legal validity.

Mortgage Costs

When it comes to taking a mortgage in Dubai, you will have to usually pay a fee of 0.25% of the balance to register the loan. The lender may also charge a valuation fee and require you to pay for mortgage protection insurance.

Getting a pre-approval letter

After filing for a mortgage, the most important step is to get a pre-approval letter. A pre-approval letter is an official document issued by the bank and considered as evidence of your eligibility for obtaining housing finance.

It enumerates your maximum borrowing limit and offers the certainty of obtaining a home loan.

Find a property you want to buy

Once you have decided the budget, have a down payment ready, and the pre-approval letter in hand – it’s time to find the property in Dubai. It is because the pre-approval letters remain generally valid for 60 to 90 days, so it is the right time to start searching the property. And as soon as you find a property that matches your needs and fits into your budget, you must make an offer.

In a few cases, people find the property first and then apply for the mortgage but in that case, it may be late to get deal. Once pre-requisites are met and you find a property, you can apply for a mortgage.

Finalize the property deal

As it is previously mentioned that once you find the property in Dubai, you can reach out to the bank to finalize the loan agreement. The bank can also assign an expert to scale the value of the property and help you make a good offer.

After finalizing the deal, you can pay the down payment and proceed to complete the transaction. Once the bank transfers the amount to the seller, you will become the owner of the property in Dubai.

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