Mortgage FAQs | Money Maestro - Your Financial Guide in Dubai & UAE

Mortgage is important tool to get the finance for buying a property. As we know, for every purchase you need money. In case of property the amount is huge. It is not possible for everyone to have such a huge amount in their bank account. In such cases, Banks help us by way of financing our purchase which is called mortgage.

Mortgage helps the buyer to purchase a property without any burden as the bank is paying the amount. You have to pay the initial amount and rest payment is done in instalment (an amount fixed by bank) for a certain period of time and you can own the property.

A conventional mortgage is made up of principal (the loan amount) and the interest charged on loan. In this mortgage bank or any financial institution will lend money to the buyer to purchase a new home and they will charge interest on it.

Islamic mortgage is an interest free mortgage. Islamic mortgage is based sharia law (Islamic law). In Islamic law interest is prohibited. Under Islamic mortgage the Islamic bank will purchase the property on behalf of the buyer and will further lease the same to the buyer till the time total payment is made.

UAE law says that UAE national as well as Expats both are eligible to get loan (mortgage) in UAE to buy the property. You can apply for a mortgage in Dubai if you are—

A UAE national or resident/Expats
Aged between 21 to 65
Have a monthly income of AED 15K (salaried) and AED 25K (self-employed)

Following documents are required for mortgage in case of buying a property:

Copy of your passport and Visa
Copy of Emirates ID (in case of UAE residents)
Salary certificate for proof of employment
Last six months’ payslips and bank statements
Latest credit card statements
Proof of your residence (copy of tenancy contract or DEWA bill)

In Dubai, home mortgages are sourced through banks and must be registered with the Dubai Land Department (DLD) to be legally valid. You can directly approach your bank for their available mortgage deals or hire a mortgage broker to work on your behalf.

There are several factors you need to consider. These factors include, but are not limited to:

Your Lifestyle
The type of property you want to buy
The loan amount you need
The cash deposit amount you need to pay

Most banks have their online mortgage calculators that allow you to input your variables and get the idea of their monthly instalments under applicable rate of interest in Dubai

The most important step in the process of applying for a mortgage in Dubai is getting a pre-approval . A home loan pre-approval letter is an official document issued by the bank as evidence of your eligibility for obtaining finance.

Normally, a home pre-approval letter from a bank takes 3-5 working days.

In case of an UAE national you will get 80% of the total amount financed by the bank. In case of an Expat you will get 75% of the purchase amount financed.

Due to coronavirus pandemic the banks have increased the percentage of mortgage amount. Currently, in case of UAE national you will get 85% of the total amount financed. In case of Expat you will get 80% of the total amount financed.

UAE Nationals – 15%
Expat residents – 20%

All property whether offshore or onshore, free hold ownership or leasehold up to 99 years, gifted property the buyer will get mortgage.

There are two type of mortgage available in UAE.

Fixed rate mortgage: A fixed rate mortgage is where the rate of interest is fixed for a certain period of time. In this case the amount and the time both are pre decided.
Variable rate mortgage: A variable rate mortgage is where the rate of interest payable is linked to 1, 3 and 6 month EIBOR (Emirates Interbank offered rates). That means the rate you are paying can go up and down depending on the EIBOR.

A mortgage is not valid unless it is registered with the Department i.e. RERA. The owner of the property has to bear the cost of registration. Generally the registration amount is 0.25% of the mortgage amount plus AED 4100.

The bank and financial institutions are the lenders to the buyers they provide the money to purchase the property. The whole mortgage depends on the bank. They decide upon the rate of interest. The term of loan and the repayment schedule. As the rate of interest and the terms of loan varies from bank to bank it is advisable to the buyers to consult their property advisor before deciding on the bank.

After deciding on the property we have to look for the appropriate bank that can finance the purchase. The buyer must check the rate of interest offered by the bank. The rebates offered by the bank. They should also check the banks reputation with its client whether the bank is buyers friendly or not.