How to get a mortgage in the UAE

Mortgage in Dubai 2024

Trends in the UAE Mortgage Market in 2024

While real estate transactions in the UAE are predominantly made in cash or according to the developers’ payment plans, demand for mortgages may increase in 2024. There are several reasons for this. Firstly, the key interest rate in the Emirates is forecasted to decrease by a total of 100 basis points by 2025. The dirham is pegged to the US dollar, and therefore the monetary policy of the UAE central bank follows the Federal Reserve's, where a gradual rate reduction is expected after a prolonged period of rate hikes. More favorable credit terms will be welcomed by those buying property for personal use. The second reason is that rental prices in Dubai are rising. With improved mortgage offers, some renters may transition to becoming property owners, as the monthly loan payment may appear more competitive than the cost of rent. Thirdly, current mortgage borrowers will have the opportunity to refinance loans at lower rates. Additionally, a reduction in mortgage rates may attract property investors looking for short-term gains, as home prices in Dubai remain high.

Mortgage Eligibility

- Mortgages in Dubai are available to citizens, residents of the UAE, and non-residents. However, it should be noted that conditions for non-residents will be much stricter, and the number of banks willing to extend mortgages for them is limited.

- Potential borrowers must be at least 21 years old and not older than 65 years.

- Minimum monthly income requirement: AED 15,000 for salaried individuals and AED 25,000 for self-employed individuals. Specific limits depend on the bank.

- The down payment must be at least 25% for properties valued up to AED 5 million. For non-residents, the down payment is increased to 50%.

- The mortgage term is up to 25 years and not less than 5 years.

- Banks may set additional requirements, such as a minimum employment period at the current job or a minimum number of employers.

- Foreigners can obtain a mortgage at a rate ranging from 3% to 5%.

Documents Required for a Mortgage

First, you need to obtain approval for a mortgage from a Dubai bank and only then choose a property. The following documents are required for loan approval:

- Copy of visa and passport

- Emirates ID

- Salary certificate to verify income

- Proof of residence: lease agreement or utility bill

- Bank statements for the last 6 months

- Credit card statements

Non-residents will need to provide:

- Copy of passport

- Bank statements for the last 3-6 months

Additionally, banks may request: tax returns, corporate documents and license, as well as audited financial statements for those who own a business, and information on other existing loans.

Mortgage Process

1. At the first stage, you need to approach banks to understand which one is ready to provide a mortgage for you. You can submit documents by yourself or use a broker. The second option is more reliable, as specialists have extensive experience and know which bank is most likely to approve a mortgage in your circumstances.
2. Get pre-approval from the bank (pre-approval letter, approval in principle). This is an official document from the credit organization issued if you meet its mortgage requirements and contains the size of the credit limit allowed to you, serving as a kind of guarantee for mortgage approval.
3. Choose a property. After receiving pre-approval, you have 60 to 90 days to decide on the purchase.
4. Negotiate with the seller, sign a letter of intent, and pay the deposit.
5. Apply for a mortgage and choose a mortgage program. Then undergo a full credit check. At this stage, the bank will also appoint an appraiser for your property. If everything is ok, the bank approves the mortgage.
6. Complete all legal procedures, and pay additional fees and commissions.
7. Register property rights with the Dubai Land Department (DLD). You become the owner of the selected property and start making monthly payments.

Mortgages for Non-Residents

- Banks in Dubai may consider granting mortgages to non-residents of the UAE. Requirements for borrowers vary depending on the financial institution, but usually banks finance no more than 60% of the property's purchase price, and on average, 50%.

- In addition, the borrower must have insurance. Without it, the mortgage will be denied.

- Banks have stricter requirements for non-residents: shorter loan terms, higher monthly payments, larger down payments.

- Not all properties can be purchased with a mortgage in Dubai by foreigners. Only properties in freehold areas in Dubai are permitted.

Types of Mortgage Programs in Dubai Banks

Banks in the Emirates offer various mortgage programs to choose from, but they basically boil down to two types - fixed-rate and variable-rate mortgages.

- Fixed-rate mortgage. A fixed rate is set for a certain period, allowing the borrower to plan their payments, and they are protected from rate increases. However, this period usually does not exceed 5 years, after which the contract conditions are revised based on a rate that exceeds the EIBOR key rate. This type of mortgage is suitable for borrowers aiming for short-term repayment.

- Variable-rate mortgage. In this case, the rate depends on the EIBOR level, and the borrower may benefit from a rate reduction or lose out in case of an increase. It is suitable for borrowers with a good liquidity.

Potential borrowers can also consider the following types:

- Discounted rate mortgage. It is a version of the variable-rate mortgage where the borrower receives a discount from the bank in the form of a reduction on the bank's base rate. Usually, such a program is available to first-time buyers and has a limited duration, after which the discounted rate changes to a standard one.

- Mortgage refinancing. In Dubai banks, it is possible to obtain a new loan to repay the previous one on more favorable terms, thereby providing a lower monthly payment or reducing the repayment term.

Additional Costs 

In addition to the down payment, borrowers should be prepared for the following mandatory expenses associated with obtaining a mortgage in the UAE:

- Bank mortgage processing fee of 1% of the loan amount +5% VAT

- Borrower's life insurance ranging from 0.4-0.8% per year on the decreasing loan balance

- Home insurance, approximately AED 1,000 (not compulsory)

- Property appraisal fee - AED 2,500-3,500 +5% VAT

- DLD fee for mortgage registration, 0.25% + AED 290

Which Banks Offer Mortgages in Dubai?

You can obtain a mortgage in Dubai from the following banks:

- RAKBANK

- CBD

- HSBC

- Emirates NBD

- First Abu Dhabi Bank

The real estate market in Dubai continues to thrive as the emirate's economy develops, functioning as an important trade and financial center where many strive to establish their position to conduct and expand business, as well as enjoy a high standard of living and service. One way to do this is to buy property in Dubai and obtain residency. Our specialists know all about purchasing homes and becoming a resident of the UAE. They will help you with all the nuances, and tailor your case according to your requirements and goals.