Investing in your dream home is a very big deal in your life. And the process involves meeting with developers and agents, browsing through the internet, talking with family and friends, visiting properties, and then making the final decision. All these things are exciting, but there is one thing that is often less exciting, financing your home. 

You need to choose the right type of mortgage in Dubai so that you can properly finance your dream home. If you are looking for mortgage options in Dubai and the ways to make the most out of it, then this guide is perfect for you. In this detailed article, we will be delving into details that cover the basics of a mortgage in Dubai. 

Mortgage Law In Dubai 

The Mortgage Law of Dubai implies property mortgage and property units as security for a debt, which is registered within the Dubai Land Department. It highlights that a valid lender should be a bank, financial institution, or company actively licensed and registered with the UAE 

Central Bank to offer property financing in the country. Additionally, the mortgagor needs to be the owner of the mortgaged property and have the right to dispose of the same. 

The law requires that only mortgages that are registered under the Land Departments on the real estate register or the interim register will be viewed as valid. The mortgage ranking is determined by the allocated serial number and time on the registration. In Dubai, only registered mortgages are considered lawful. 

Coming to the enforcement, the law mentions that any clause within the mortgage contract specifying that when the borrower is not able to pay the bet within a certain period, the lender can seize the title of that property or can sell the property without going through the enforcement steps stated under the law. 

The provision also mentions the execution process on mortgage property foreclosure, offering a streamlined procedure on default by any borrower. Following are the enforcement steps:

• In case of default in payment by the mortgage borrower, the lender needs to provide him or her with 30 days of written notice via the Notary Public prior to going forward with the execution procedure.
• Even within 30 days, if the borrower fails to pay the due sum, upon the request of the lender, the execution judge shall order an attachment against the concerned property. It will allow the property to be sold through a public auction adhering to the applicable procedure mentioned in the Land Department. 

Are You Eligible To Mortgage A Property In Dubai?

Irrespective of the type of property, to mortgage a property in Dubai, you must fulfill certain eligibility criteria. Following are the criteria you need to fulfill:

• You must be between the age of 21 and 65
• If you are salaried, you need to have a monthly income of at least AED 15K. 
• If you are self-employed, your monthly income should be at least AED 25K. 

The minimum salary requirement for a mortgage can vary based on the bank’s policies. In fact, some banks allow UAE nationals to take a loan with a monthly income of AED 8K.

For self-employed individuals to get a mortgage, they must be running the business for a minimum of two years. It would be helpful if they already have an existing relationship with the bank. 

Moreover, some banks will only provide a mortgage to applicants who are working for certain predetermined companies. This implies that if you are working in a government company, financial institution, or multi-national company, your chances of getting a mortgage increase. 

However, if you are working for a less-established employer, you are likely to have problems getting a loan from some lenders even when you are creditworthy.

Expats can also avail of a mortgage in UAE, but there are certain criteria. You must have your existing job for at least six months or one year based on the lender’s rules. 

Additionally, it is imperative that you hold a clean credit history when applying for a mortgage because lenders will reject the applicants who have non-existent or poor credit files. So make sure you check your credit file and repair any issues before applying for a loan. 

And, if you have no history of credit, then you should consider investing in a credit card and paying the bill every month to establish some credit history.

Different Costs To Consider While Investing In A House In Dubai 

There was a time when high property prices made buying a home in Dubai a mere dream for many. But today, the development of affordable housing options and declining prices have allowed people to turn their dreams into reality. In fact, in some cases, the monthly mortgage repayments would come less than rents. Additionally, you will also enjoy the added advantage of capital growth on the asset. 

Having said that, you need to understand the overall costs associated with buying a home that goes beyond your loan repayment. There are various charges imposed by the government agencies like real estate developers or agents, Dubai Land Department, mortgage lenders, conveyancers, etc. 

Following are the costs that you should consider when planning to buy a house in UAE: 

• Government Fees 

As we mentioned above, in UAE, all purchases are required to be registered with the DLD within 60 days of your transaction. And if you are unable to do the same, your purchase will be considered void.

Theoretically, the DLD charges, which are 4%, must be divided in half between the seller and the buyer. However, practically, the buyer ends up paying the whole 4% to the DLD. Additionally, the buyer also has to pay for the Property Registration Fee. When you invest in a home through a mortgage, you have to pay an extra fee of 0.25% of the overall mortgage value to the DLD. This is done to register your home loan against the property. 

• Dubai Land Department Fees – 4% of the overall purchase value. Additionally, AED 580 admin fee is provided for offices and apartments, AED 40 for off-plan, or AED 430 for land. 
• Dubai Land Department Mortgage Registration Fees – 0.25% of the overall mortgage amount along with AED 290. 
• Property Registration Fee – AED 2000 along with 5% VAT for properties valued under AED 500,000. And, AED 4,000 plus 5% VAT for property valued over AED 500,000.

• Mortgage Fees 

Banks charge a 1% mortgage arrangement fee along with 5% VAT. Additionally, buyers also have to pay a property valuation fee, which could range between AED 2,500 and AED 3,500 plus 5% VAT. The fees are payable directly to the bank. Some enable buyers to add these upfront costs to the mortgage to alleviate the stress of the initial financial expense.

 It is also vital to note that when investing in a property where the seller has a registered mortgage, the buyer will first have to pay out the seller’s mortgage to acquire the NOC or No Objection Certificate to process the property transfer through the DLD. Moreover, NOC states that the seller has paid off all the fees, and the developer has no objection to the subject sale. 

1. Service Fees 

After the transaction has settled and furthered the property owner has been transferred, there is an extra expense to consider; service fees. You have to pay for the annual maintenance charges on the property to the Dubai Land Department, which is based on the RERA Service Charge and Maintenance Index. 

It determines a certain charge per square foot that differs based on the community. You can source the updated fees from the DLD official website. The amount is contributed to the maintenance of common areas of the community or building, for instance, security, swimming pools, landscaping, elevators, etc. 

• Initial Deposit

For primary as well as secondary transactions, buyers have to pay a certain deposit in order to secure the purchase. In the case of ready property purchases within the secondary market, buyers have to pay 10% of the overall purchase price to the seller through a cheque. 

This amount is collected by the authorized agent who possesses the deposit until the property is transferred successfully. Additionally, where there is an existing mortgage registered against the property, the buyer needs to pay out the mortgage to apply for a NOC to acquire the title deed for the concerned property. 

• Insurance Fees 

While home insurance is not mandatory, it is highly recommended. It provides you with protection against loss or damage because of accidents, theft, natural disasters, or fires. Life insurance is mandatory when taking a mortgage in the UAE. 

Premium payments of life insurance are continuous shot of mortgage homeownership that must be factored into the budget. Generally, banks charge it monthly, separate from the mortgage. They charge around 0.4% to 0.8% annually on decreasing mortgage balance.

However, some banks require the insurance policy to be paid in full for a year. Banks have their own life insurance policy underwritten by leading life insurance companies. But if you are looking for a cheaper option, you should consider getting an external life insurance policy. 

• Home and Contents Insurance – Around AED 1,000
• Life Insurance – Between 0.4% and 0.8% annually on decreasing loan balance

What Documents Are Needed To Acquire Home Loan in Dubai?

When you are applying for a loan in Dubai, there is certain paperwork that you need to submit to process the application. The documentation requirement differs from one bank to another. But generally, banks require you to submit the following documents:

1. A copy of Emirates ID
2. A copy of visa and passport
3. A salary certificate to ensure employment 
4. Banks statements and payslips for the last six months 
5. Proof of residences like DEWA bill or tenancy contract
6. The latest credit card statement 

What Is The Process Involved In Getting A Mortgage?

Following are the steps you have to go through to get finance in UAE:

• Finding The Right Lender 

Home loans in Dubai are sourced via banks that are registered with the Dubai Land Department. You can either hire a broker to work on your behalf or directly approach the bank. When you hire a broker, you can leverage their knowledge and insight into the local market and extend available home loan options that would work best for you. It allows you to direct your efforts on finding the perfect home rather than juggling with the paperwork and other formalities. 

• Selecting The Type Of The Mortgage 

There are different types of mortgages available in Dubai. They would comprehensively fall under the categories of fixed-rate and variable-rate loans. There are different factors that you must consider when deciding what type of mortgage is ideal for your circumstances. 

Some of the key factors are your lifestyle, the amount of loan you need, the property you want to purchase, the cash deposit you can pay. Generally, banks have dedicated online mortgage calculators that enable you to insert variables and get approximate monthly installments. 

• Obtain Pre-Approval Letter 

This is the most important step of the process. A mortgage pre-approval letter is defined as an official document which is issued by the bank. It acts as evidence that you are eligible for housing finance. It highlights the maximum amount the bank will give you like a loan and offers better certainty of availing of a home loan. Typically, it will take three to five business days to get your pre-approval letter. 

• Finding Your Property

Once you have a pre-approval letter and a budget, you can look for your home. A pre-approval letter is valid for 60 to 90 days based on the lender. Therefore, you have a sufficient amount of time to search for your dream property. You can also find your property first and then apply for a loan. But sometimes, you are not able to secure the entire amount of property value that you need to purchase. 

• Finalizing Your Purchase

Once you have finalized the property, you can finalize the loan agreement with the bank. The bank is likely to assign a property evaluator to assess the value of the property and help you to make a good offer on the same. After you and the seller have agreed on a price, you can pay the deposit and determine a date on which you can complete the purchase transaction. On that date, the bank will release the amount to the seller. 

Taking a mortgage in Dubai does not have to be complicated. Above are some basic information that is very important in taking a home loan in Dubai. 

If you are considering buying a house, then it is time to make that call and get pre-approved for a mortgage. Getting pre-approved lets the seller know how much money they can expect from you in order to purchase their property.

It also allows you, as the buyer, to know what your monthly payments will be and how much equity you have in this property. If purchasing a home is something that interests you, then we highly recommend hiring a mortgage broker.

Who Is A Mortgage Broker?

A mortgage broker is a person who assists clients with securing financing for real estate. A mortgage broker can help you find the best loans, rates, and terms to suit your needs as well as those of your lender.

A mortgage broker can help you to understand the process of buying a home. They will guide you through all the steps and paperwork involved, which is especially helpful for first-time homeowners who are not familiar with how things work.

Hiring a mortgage broker may also save you time in comparison to going directly to your lender or bank because they have many contacts.

What Are The Duties Of a Mortgage Broker?

A mortgage broker will help you to find a loan and negotiate the best terms for your situation. Some of their jobs may include:

• Researching rates, comparing financing options, reviewing credit history
• Administrating financial information such as income, debts, and assets
• Explaining how lenders work with various types of loans
• Answering questions about homeownership in general or specific transactions that are not straightforward so they can be discussed during negotiations. They also act as an advocate for clients who do not have knowledge or experience relating to mortgages.

Reasons To Hire A Mortgage Broker

Following are the reasons you should consider hiring a reputed mortgage broker:

1. Financial Assistance

A mortgage broker can assist in finding the most affordable financial assistance for a customer.If you are looking to buy your first home, it is important that you do not go into this purchase blindly without understanding what prices and payments will be like. A mortgage broker will help guide customers through all of the steps involved with getting approved for a loan and provide them with reliable information about interest rates on each type of loan they might want. 

They’ll also review the property’s value, past sales data from recent comparable properties and talk about down payment requirements before giving advice on how much money needs to be saved up beforehand if buying a particular house becomes an option.

As stated earlier, one reason homeowners choose to hire brokers over banks or other financial institutions is that they provide expert advice. This means that customers of all levels will be able to get the help they need in order to make a sound purchase decision and avoid making any costly mistakes when it comes time for them to buy their first home.

A mortgage broker can also offer assistance with finding affordable homes, obtaining good interest rates, reducing monthly payments on loans, getting short-term financing solutions for recent college graduates who are working but don’t have enough money saved up yet, and more.

It’s important not only for those needing credit history improvements before qualifying for mortgages but also those looking at starting over after bankruptcy has occurred in the past too. A qualified real estate professional will be able to guide you through the process and help you avoid any pitfalls or costly mistakes.

Strong credit history is essential for anyone looking to put in an offer on a new home, but it isn’t always easy to build up that kind of record without first starting out with some other form of financing like student loans.

This makes mortgage brokers even more useful because they can work with customers who have less than perfect histories in order to qualify them for their desired loan type anyway, whether it’s conforming mortgages, subprime mortgages, insurance rate or any other information.

2. Expertise of Mortgage Broker

A mortgage broker will also be able to help customers with any other questions they might have about their homes as well. They are experts in finding the best rates, down payments, and loans for individuals’ particular financial situations so that all homeowners can get what they need from a home loan regardless of how much money is saved up or if there are past mistakes on one’s credit history.

Mortgage brokers spend most of their time researching new developments when it comes to mortgages, getting familiar with the latest regulatory changes, and staying current on popular interest rates available both locally and nationwide; which means that customers who decide to hire them for assistance won’t be relying on just anyone for advice but an expert in this field instead. 

This makes the decision even more worthwhile in the long run and ensures that customers will be getting help from someone who can provide them with all of the information they need to make sound financial decisions.

They have access to a huge network of lenders, banks, credit unions, and other entities, which means that homeowners are able to take advantage of many different types of loans when they decide to work with brokers rather than just sticking with one bank or institution for assistance. 

This also comes into play when it’s time for refinancing as well because this allows customers to choose various institutions based on their needs at any given moment instead of being stuck with just one company, as some people might think is necessary otherwise.

A mortgage broker is worth hiring if you want expert advice, affordable homes, good interest rates on loans that easily suit your needs, and short-term financing solutions for recent college graduates who don’t yet have enough money saved up. This is also the best option if you are looking to start over after bankruptcy has occurred in the past and need someone with a strong credit history as well as when it’s time for refinancing too.

3. Negotiate On Your Behalf

A good broker will be able to negotiate on your behalf and advocate for you during the process. They are professionals who have a lot of experience working with banks, lenders, and other financial institutions, so they know how to get what they want when it comes time to sign paperwork or close the deal on this new home purchase.

It’s important not only for those needing credit history improvements before qualifying for mortgages but also those looking at starting over after bankruptcy has occurred in the past too. A qualified real estate professional will be able to guide you through the process and help you avoid any pitfalls or costly mistakes.

4. Streamline The Loan Process

Mortgage brokers also streamline the loan process so that it doesn’t take as long to get everything finalized and ready for the go-ahead. This is because they are typically working with many different institutions at once, which means customers won’t have to wait around or do all of the leg work themselves before getting approval from one company alone.

It’s much more efficient, convenient, and less time-consuming this way while still providing them with top-notch service and support in regards to their financial needs, even if those needs include credit history improvements on a new home purchase too.

5. Access To Good Lenders

Those who use a mortgage broker have access to all of the good lenders out there, not just one or two. This ensures that customers are able to compare the rates from various institutions and find those which best suit their needs without having to go through all of this research themselves before speaking with representatives for these companies.

It’s an invaluable service in terms of saving time as well as ensuring that they will be getting some expert advice during every step along the way, too, even when it comes time for refinancing after a few years down the line. Those who need help finding affordable homes should also utilize brokers because they can provide assistance on where is the cheapest place for them to live based on what type of loan they qualify for, how much they have saved up, and their current job status.

6. Flexibility In Execution

A good broker will also offer flexibility in execution so that you can get what you want as quickly as possible. This not only includes when it comes to finding the best rates and terms but if a customer needs short-term financing solutions for recent college graduates without any money saved up yet or help with credit history improvements too.

If someone is looking at starting over after bankruptcy has occurred in the past, then this is an excellent option because brokers are well versed in how to make things happen on behalf of their clients during those times; even when it’s time for refinancing down the line which again takes some pressure off of them.

7. The Application Will Be Approved At Once

The application will be approved at once. This is because the broker always has a direct line of contact to speak with lenders and financial institutions, which means they can answer questions about applying for mortgages, what types are available, or anything else that may come up in regards to this process too; even when it’s time for refinancing down the line.

Having someone knowledgeable on their side who advocates for them during every step along the way from start to finish ensures that customers will have peace of mind knowing everything was done correctly while also saving themselves valuable time.

What To Look For In a Mortgage Broker?

Following are the things that you need to consider when hiring a mortgage broker:

• Experience Of The Broker

The mortgage broker should have the necessary experience in this arena. He or she should know the ins and outs of mortgages, as well as all other aspects that are related to them, such as taxes on property sales, for instance.

A good mortgage broker is likely to be able to analyze your situation quickly and offer relevant information without you having to spend hours online researching everything yourself.

He/she should also share unbiased advice with regards to options available and what they will mean for you in particular – whether it’s about choosing between fixed-rate vs. adjustable rate mortgages or if refinancing is an option at all given your financial circumstances.

• Reputation Of The Broker

The best mortgage brokers have a reputation that precedes them. They’ve been in the business long enough to know how it works and what they need to do. These brokers are professional, ethical, and honest about their work.

As you search for your ideal broker, keep these factors in mind: Ask around-ask friends or colleagues who they use when looking for a loan; ask other professionals such as lawyers or realtors if they can recommend someone based on their own personal experiences; visit LinkedIn profiles of those with established careers to see what people say about them at face value (this is not always full disclosure, but it’s worth considering); read reviews of each candidate online by past clients-what did others say? What does the company say about itself?

Reviews from the public and professionals within the industry are a great way to find out more information about each candidate. It is worth taking your time in doing so, as it can make all the difference down the road.

• Check For References

Once you have a few candidates to work with, be sure to ask for references from their previous clients. You can call these people up and speak directly about the experience they had working with your broker-this is an invaluable service that most brokers will offer as it speaks volumes about them.

If there are any complaints at all, then move on or carefully consider what was said and if it’s something worth looking into further before making a final decision. It’s also helpful to find out how long they’ve been doing this experience.

Asking someone who has worked closely with the individual should give you some good insight into whether or not they’ll make a decent choice for your mortgage needs.

A great way to know if you are dealing with a reputable mortgage broker is to speak with their references, ask about how long they have been in the business and what kind of experience they have had.

Conclusion

If you are trying to buy a house in Dubai, the expertise of a mortgage broker can be invaluable. The broker will leverage his or her experience in the field to ensure you get the best deal in the market.

Paying off your mortgage is a huge accomplishment. If you’re tired of making monthly payments, then this blog post will provide some tips to help you pay down your mortgage quicker. 

1. Choose A Low-Interest Lender

Choosing the right mortgage lender is one of the most important and complicated steps in paying off your home quickly.

Choosing a low interest rate with an accelerated repayment plan can make all the difference, so it’s best to spend some time researching which lenders are currently offering lower rates than what you currently have. 

If you’re looking for more help deciding where to get a new loan or how much house payment you can afford, consider talking through these decisions with someone who works specifically in this field:

A professional financial advisor will be able to explore options that work well for your individual situation and provide personalized advice on how to pay off your mortgage quicker.

For those of us who don’t want any additional stress, they can also help you make confident decisions about your mortgage without the need to do any additional research.

2. Pay Higher EMI

One of the most important things that you can do to pay off your mortgage quickly is to increase your EMI. You may not be able to afford a higher monthly payment, but there are ways in which you could make it work for you. 

If your salary has increased and inflation is low, consider switching over from a 12-month EMIs (equal monthly installments) to an 18-month payoff plan or vice versa. This will ensure that more money goes towards paying off the loan early into its term than if you were on a standard repayment schedule during this time period.

If at all possible, try increasing payments by making one larger lump sum payment instead of smaller ones each month – even if only temporarily until something changes financially. If you have a spare house that is not rented or occupied but rather vacant, consider selling it.

This will help increase your monthly cash flow and allow for more money to be used towards the mortgage loan.

If this isn’t possible, try getting a second job outside of work hours if possible, which would add income while also decreasing time spent at work each week.

If the individual cannot do this, then they can start looking into organizing their finances so as to spend less on things like entertainment and travel – both expenses could be cut down significantly without affecting the quality of life too much. 

You may need to look into other financing options such as refinancing though in order to make up for any difference from these expenditure cuts (i.e., if you are unable to find a second job and need to cut costs).

3. Refinance Your Mortgage

Refinancing your mortgage, known as refinancing or re-fixing in the industry, is a way of paying off your loan more quickly. Some mortgages can be refinanced to make monthly payments less and/or extend the length of time it takes for you to pay back what you owe on the house.

If you want an even quicker payoff than that, there are other ways to refinance. But if you are considering a refinance, there are things to consider.

If your credit score is good enough, some lenders will let you include your home as collateral for the new loan. This means that they’ll give you money at more favorable terms and rates than what’s currently available in the market because of their confidence that they can eventually take back ownership of it from you by foreclosing on it in case your monthly payments become late, or something like that happens. 

You may have to pay an upfront fee or origination fee (the amount charged when someone takes out a mortgage), but this could help lower interest charges over time since other mortgages typically only charge interest on the original balance being borrowed (or sometimes nothing) instead of the whole loan.

4. Rent Out Space in Your Home

If you’re not living in your home, it might be easier to afford the mortgage. Consider renting out a room or even the whole house and use that income to pay off your loan faster. You can rent an Airbnb for a weekend trip if you live close enough to major urban hubs with high rents already.

If you have more space than one person could occupy at once, consider listing some of those rooms on sites such as Airbnb, so they are occupied most days during the week by people traveling through town without needing full-time housing arrangements (in other words, short term rentals).

This will make up a significant chunk of what is owed each month on the mortgage while still providing you with a space to live in.

If renting out rooms or the whole house isn’t an option, consider putting it on for sale and use that money toward your mortgage payment instead. You will still be able to make monthly payments on the home until someone purchases it from you while also reducing what is owed each month by selling at a higher price than what’s owed currently due to interest rates being lower when they sell their own place. 

Either way, you’ll have additional funds coming in every month, which can go straight towards paying off the loan balance without having as much of a hit taken out of your paycheck since there are no other expenses associated with living elsewhere like utilities, food, transportation costs, etc.

5. Purchase A Home You Can Afford

If you plan on living in your home for a while, then it’s best to buy one that fits within your budget. That way, you can start saving money right away and have an easier time making payments each month. Plus, if the market changes or something happens with work or other finances, you’ll still be able to afford what was once out of reach.

• Be Careful About Buying A Home You Can’t Afford – Be realistic about how much house is available at your price range.*
• Don’t Get Distracted By The Extras- Keep basic amenities intact like electricity and plumbing before adding anything else onto the list of desired features.
• Maintain Your Budget And Save For Down Payment- Remember to save for the down payment and have a budget in place that is realistic.
• Consider A Home Warranty- When purchasing a home, always purchase homeowners insurance as well. This will protect your investment from damages or accidents like fires or floods. Plus, it can be offset by tax deductions if you’re looking to make an expensive purchase.

6. Save And Invest For Your Down Payment

To get ahead on paying off your mortgage quickly, set up automatic transfers into a savings account every month so that money doesn’t go towards other things. Another option could be investing this part of your income into stocks with dividends – these will let you earn more cash without having any risk.

Mistakes To Avoid When Taking Home Loan In UAE

To make the most out of your mortgage, you should avoid the following mistakes:

• Applying For Mortgage That You Cannot Afford

There are certain mistakes that you will need to avoid when taking a home loan in the UAE. For example, if you cannot afford the mortgage and it is too big for your budget, then this can be a mistake because there is no point in applying for an expensive mortgage that may cost more than what you have saved up for. 

Secondly, do not apply for a very long-term repayment period as this could also end up costing higher interest rates which might leave you with less money at the end of your term.

• Mistake Of Not Getting Sufficient Mortgage Insurance

One of the mistakes many people make is not getting sufficient mortgage insurance. It’s important to know what your risk tolerance and financial situation are so you can protect yourself by buying enough coverage.

It’s also important to know what your mortgage insurance is. Your lender might not be willing to tell you the precise details of the coverage, but they should give you a clear idea of how much money will go towards premiums and how much goes into reserves for when you no longer have an income stream due to retirement or disability.

You may want to consider interest-only mortgages if it’ll help with debt reduction since these loans can often make monthly payments lower than fully amortized ones. It’s good that most lenders require a 20% down payment on the purchase price in order to qualify for this type of loan, so there aren’t any surprises about costs later on. You should always consult with your professional financial advisor before making any decisions concerning your mortgage.

• Choosing The Wrong Loan

The first thing to look for in a mortgage is whether it’s the right one. There are two types of mortgages: fixed or variable interest rates. Fixed-rate loans have lower monthly payments, but you won’t be able to take advantage of when market conditions change and make it cheaper (or more expensive) to borrow money from your bank. 

Variable-interest loans allow you access to these opportunities and can end up being less costly over time if they’re set with an initial low-interest rate that gradually increases as the term grows longer. A great way around this dilemma is choosing adjustable-rate mortgages – ARM where the borrower chooses their own target interest level each year, which changes based on how much inflation there has been since they last made adjustments.

• Not Reviewing Your Credit Score Before Applying For Home Loan

When you are applying for a home loan, it is important to review your credit score. Your score can have an impact on the interest rate and even what type of mortgage plan you qualify for. Lenders often use this information when deciding whether or not they will approve your application. 

It’s also wise to check your credit report before the approval process starts so that any misinformation contained in these reports does not affect your ability to get approved for a loan with favorable terms.

• Not Comparing Home Loans Before Buying Your Home

When you are shopping for a home loan, make sure to compare the different types of loans available. Your mortgage company will be able to tell you what type of plan is best suited for your needs and can advise on which lenders offer these plans. 

You may find that there’s more than one option that meets your requirements, so it helps to have an unbiased opinion about which lender might be right for you before making any decisions. With a little bit of research, you can find out which loan is the best fit for your needs and save yourself money in the long run.

• Not Checking EMI Affordability

Some people might be tempted to buy a home without checking the monthly payment. This is risky because some homes are more expensive to maintain than others, and you could end up in over your head with higher-than-expected costs. 

You should also make sure that the property taxes can fit into your budget so that you don’t have them negatively impact other aspects of your finances. If there is any chance one or both of these expenses will increase in the future, then a different type of mortgage plan may work better for you instead.

• Avoiding Overall Cost Of Buying The House

It is smart to consider the overall cost of buying a home when you are looking at different mortgage options. This includes things like taxes, insurance, and property upkeep costs that can affect your budget in different ways depending on where you live and how much it will cost each month. Be sure to shop around for homes with lower mortgages so that you have more money left over after making monthly payments.

• Not Paying Attention To The Fees

A home loan is a big decision, so it’s important to look at all the different factors before making your final choice. One of these factors is how much each lender will charge in additional fees on top of the interest rate and monthly payment. You should always compare this figure when you are looking for loans from different lenders – it can have an effect on the total amount that you end up paying back over time.

Just like any major purchase, buying a house comes with its own set of expectations and responsibilities. When searching for new or refinanced mortgages, make sure to check out all your options so that you don’t have unpleasant surprises later down the line.

Mortgages in the United Arab Emirates are easily available for people looking to invest in property or buy a new home. There are two ways you can invest in a property in the UAE – on a mortgage or with cash.

While cash investments can prove to be cost-effective, mortgages allow for greater flexibility in terms of how you repay and manage your finances.

UAE is a fantastic destination for professionals and families alike, with a range of career opportunities and all kinds of activities for all interests and ages.

So, those looking to settle may need a new family home, and mortgage providers are well-equipped to deal with all kinds of mortgage applications – whether expat, non-residential, or residential. 

Before you finalize the property, it is important that you understand how mortgages in the UAE works, the types of mortgages available in the market, and the steps required to get one set up. 

This comprehensive guide explains to you the prerequisites to get your first mortgage. 

Mortgages in the UAE 

The United Arab Emirates has become one of the most popular destinations, especially business-friendly regions like Abu Dhabi and Dubai. With an increasing population of foreign nationals and ex-pats, the mortgage market in the UAE is well-established, with both local and international lenders offering mortgage loans.

Please note that UAE is offering both buy-to-let and residential mortgages for people living in the country. Nevertheless, different mortgages have different criteria. 

There are dozens of different mortgage providers in the UAE, from globally known brands to more localized financial institutions. The range of options you have means that you need to do a lot of research in order to understand how the different products work. This helps in making an informed decision. 

How Easy is it to Get a Mortgage in the United Arab Emirates? 

It is indefinitely a big decision to buy property in the UAE. While finding your dream home or property in the UAE is not much of a hassle, getting a mortgage loan to purchase the property involves some challenges. 

Whether you are an expat or a permanent resident of the country, there are some eligibility requirements that you need to fulfill to get approval for your mortgage. Overall, you may be faced with some challenges. 

• New to the UAE 

If you are an expat, then banks are very particular about certain things. For approving any kind of loan, whether it is a mortgage loan or even a personal loan, the financial institutions in the country take note of several factors.

For starters, the time you have been living in the country and the length of employment, all will be noted. If you have just landed here, your application won’t even be processed. The minimum length of time you need to spend in the country before applying for a mortgage loan is between 6 months and 1 year.

Most importantly, banks check the length of your service at your current employment, which also needs to be at least 6 months. 

• Employment Sector 

If you are a UAE national or an expat, if you have ever applied for a loan in the country, you will be well aware of one of the most important requirements – your employer company has to be listed with the financial institution in order to mitigate the risks of lending.

Although the majority of multinational companies and all the government sectors are listed with the banks, some companies are not. So, even if you meet all the eligibility criteria on the loan and have a good credit history, your mortgage loan will not be approved if the employer is not approved by the bank.

On the other hand, if you are self-employed, your length of business is considered, which is required to be at least 2-3 years. Please note that if you are applying for a mortgage with a bank that you have a savings/salary account with, your chances of getting the approval is increased.

• Monthly Income/Salary 

You will have to meet the minimum monthly income requirement to get approved for the mortgage. Whether you are an expat or a UAE resident, the minimum monthly income requirement of AED 15k is a must for salaried employees and AED 25k for self-employed. However, different banks have different criteria.

And most banks approve adding a co-applicant. That is, you can add your spouse as a co-applicant for the mortgage. This helps in meeting the eligibility requirements with ease and increases your chances of getting a mortgage loan. 

• Documents 

The documents required for mortgage loans are almost the same for expats and nationals, except for some identity proofs. If you are an expat, you are supposed to provide your UAE resident visa and passport for verification, including other documents like bank statements for the last 6 months, trade license (for self-employed), salary certificate, Emirates ID, and other documents as requested by the bank. Loan approval is not going to be an issue as long as you have all the documents. 

• Credit History 

Last but not least, your chances of getting a mortgage loan in the UAE significantly rely on your credit score. In general, a credit score can make or break your loan application. At the time of applying for a mortgage loan, the bank will gather your credit score from your financial history, which includes details like outgoing and incoming cash flow and any history of loans.

Poor or non-existent credit score results in your mortgage loan application getting rejected. So, it is advised to start building your credit history by getting a credit card and paying the bills on time. 

What are the steps in the mortgage approval process? 

As said, the lending process varies from borrower to borrower. Now you know that there are several factors that go into the play for mortgage approval, your experience might be a little different from what other applicants experience. Nevertheless, the following are the steps that usually takes place before your mortgage loan is approved by a bank in the UAE: 

• Mortgage Pre-Approval 

Mortgage pre-approval is when the financial institution reviews your finances, such as your income, debts, assets, to determine whether you are a good candidate for a mortgage loan. Based on their analysis, they will also tell you much of a loan they are willing to lend you with a pre-approval letter. At this stage, the bank will also check your credit score. 

• House Viewing and Purchase Agreement 

Once your mortgage loan is pre-approved by the bank for a certain amount, you have a price range under which you can shop confidently. The bank will not be involved with the type of property you purchase. 

• Mortgage Loan Application

In this step, you need to fill an application form that asks for information about the type of loan being used, the type of property being purchased, and details of the borrower. 

• Mortgage Processing 

Once you have completed the loan application and have a purchase agreement in place, you will move into the processing stage. This is an important step where the bank collects a variety of documents relating to you and the property you are purchasing.

The bank will review the documents to ensure that the paperwork is complete for the underwriting process. Once again, your credit report will be checked, and a home appraisal will be ordered to determine the value of the property. 

• Mortgage Underwriting

An underwriter is a key entity in the mortgage loan approval process. He/she has the power to reject a loan application if it does not meet certain pre-established criteria.

The role of an underwriter is to double-check the application and documents to make sure that both you and the property match the eligibility criteria for the specific loan. He/she will also evaluate the risk associated with the loan. 

• Mortgage Loan Approval Closing 

When everything’s in place, and the mortgage underwriter is happy with your application, he/she will label it “clear to close.” It signifies that you have met all the requirements, and now the mortgage will be transferred, and the approval process will be closed. This is the final step of the mortgage loan approval process. 

Mortgage Fees 

Applying for a mortgage in the UAE means that you have to have fees to pay. This includes administrative fees and legal fees. The amount you will have to pay will depend on your circumstances. Nevertheless, when you add all the fees altogether, it can turn out to be a costly transaction. 

In the United Arab Emirates, when you are applying for a mortgage, you can expect to pay a significantly large deposit and fees, including the following: 

• Loan protection insurance or mortgage insurance, which is compulsory. However, how much you have to pay will vary depending on the value of the mortgage and your property, including any other personal circumstances.
• Bank charges, such as insurance registration fees, property valuation fees, and mortgage processing fees.
• Mortgage registration fee, which is 0.25% of the total value of the mortgage. 

Depending on your application and situation, you may find other costs and charges associated with your mortgage, both in terms of the cost of arranging the loan and the taxes applied.

Nevertheless, it is the deposit you have to pay to secure the mortgage that will be the major initial outlay. In the case of buying an off-plan property in the UAE, this deposit amount could be up to 50% of the total cost of the property. 

On the other hand, if you are a foreign national and your main account is outside of the UAE, you might have to send money to yourself from abroad to pay the incidental costs and fees. When making an international money transfer, you will be charged a processing fee, which will be a certain percentage of the amount you are sending to your UAE account.

Banks in your home country may not offer good deals and may charge high processing fees and interest. Even if they promise to offer fee-free money transfers, the exchange rate is going to be so extensive.

Whatever your situation, you will incur costs, and that too in huge amounts. So, it is always advisable to keep an eye on the additional charges that you will be asked to pay. The best thing to do is shop around to find the best deals. 

Tip for First-Time Mortgage Buyers in the UAE 

Applying for a mortgage in the UAE is one of the most important financial transactions you will make in your life. Whether it is to purchase a family home or invest in a property for business purposes, you could use some tips that will help you in making informed decisions. 

1. Understand the market and get accustomed to the workings of the United Arab Emirates real estate market and loan market. The financial and real estate market in the country is quite different from other countries. Therefore, you need to ensure that you have a real estate agent by your side throughout the process to guide you in making a considered decision.
2. Understand your mortgage and enquire about how it works in your case. For off-plan payment plans, the developer offers plans where either a portion of the purchase value is paid pre-handover, and the rest after the completion or 100% of the purchase value of the property is paid pre-handover.
3. Always compare rates by shopping around. There are hundreds of banks in the UAE offering mortgage facilities. So, look for interesting offers and choose a bank that suits your financial standards.
4. Some banks in the UAE will give you a preferential mortgage rate if you undertake a salary transfer.
5. Understand the mortgage application and don’t sign anything before you have thoroughly read it and understood it properly. 
6. Keep the liabilities to a minimum to make sure that you can afford a mortgage.

Conclusion 

This is everything you need to know about getting approved for your first mortgage in the United Arab Emirates. As a first-timer, it can be a little overwhelming for you to take a mortgage. But it will help you in the long run if you make regular repayments. Overall, you should consult with a professional who can help you understand how things work here. 

If you want to buy a property in Dubai, there are two ways to go about it.

The first option is that you pay for the home with cash and the second one is you take out a mortgage. The latter provides you with more flexibility with regard to managing your finances. 

If you have thought about taking a mortgage in Dubai, first you have to know how it works and its process. And this article will tell you everything you need to know before you take out a mortgage in Dubai. 

9 Tips That Will Help You Secure The Best Mortgage Deals 

Home financing is a fiercely competitive market for banks in Dubai. And all licensed banks here provide some or other form of a mortgage.

One of the critical aspects that banks use to determine which applicants are eligible for which loan product is the credit history. There is an AI Etihad Credit Bureau, which monitors every client associated with the bank. Here are some behaviors that will make you more attractive to the banks and ensure you get a better deal on your mortgage.

1. Understand The UAE Market 

Understanding how the UAE real estate market works will give you a head start. The market in UAE is very different from other countries. Therefore make sure that you hire a reliable real estate agent who can guide you through the process. They can help you work through the paperwork, fees, rules, and regulations, etc. 

2. Do Not Store Unnecessary Credit Cards

When evaluating your credit report, the bureau considers both the credit limit assigned to you and its utilization. Therefore, if you have five credit cards but use only two of them, then the ones you are not using affect your credit report.

If you are plan to get a home loan, return the credit cards you are not using. 

Alternatively, you can ask the banks that issue the cards to reduce the credit limit on them. For instance, if there is a card that you only use when dining out, then reduce the limit to the amount that you need to eat out every month. 

3. Understand The Mortgage

In the case of an off-plan, developers provide payment plans in which 100% of the purchase value is either paid before handover or a percentage is paid at that time. And the balance amount is paid after the completion of the project. 

In the case of pre-handover payment plans, the availability of mortgages will be based on the form of the payment plan. If the payments become due when under construction, the bank will offer a maximum of 50%, and you will have to pay the rest of the amount. 

But these forms of payment plans are rare as developers provide payment plans where most of the purchase price is due during the hand-over.

Additionally, for ready properties, the lenders consider offering mortgages based on the UAE lending caps. 

4. Compare Rates 

There are many interesting options out there; therefore, it is important that you shop around before making a final decision. There are dedicated sites that compare the plans of different lenders so that you can evaluate and make the best decision. Comparing options will ensure that you have assessed most of the options in the market to choose the best one for you. 

5. Try Not To Switch Too Many Jobs 

Banks do not prefer customers who change their jobs between six months and one year. They look for stable employees with reliable cash flows coming every month in their bank account. But that does not mean you should not take up a better package or your dream job; just avoid switching jobs too often. 

6. Do Not Take New Loans 

If you are serious about buying a home, then avoid taking any other kind of loan a year before buying the house. This is not the time to buy a car that you cannot afford; this will quickly make you appear unattractive to the banks. Similar is the case with personal loans; try to limit your personal and expensive spending during the time you are trying to take a home loan.

7. Show Sufficient Savings 

If you have a working spouse, then transfer your savings to one bank account. And, you can show this bank account on your mortgage application. It will assure the bank that you have enough savings to repay the loan timely. 

8. Smartly Use Your Savings 

If you are saving money every month, look for a way to secure it in some kind of deposit scheme by the banks. You can do that for one month that is updated every month. This will indicate to the banks that you are responsible and prudent. 

9. Understand The Mortgage Application 

Make sure that you only go for offers that provide everything in writing. It is a sign that the lender is genuine. Additionally, do not sign any documents without reading and understanding their content properly. The knowledge of a real estate agent or legal professional can be valuable here. It will help you to avoid any mistakes that might cost you big. So paying for professional help can be worth spending money on. 

What Are The Types Of Mortgage You Take In The UAE?

Following are the mortgage options available for you in the UAE:

1. Fixed-Rate Mortgage 

In this type of mortgage, the interest rate is fixed prior to the loan tenure starts. Additionally, during the predetermined duration, which is generally five years, the rate does not alter. There are evident benefits with a fixed-rate mortgage as it is easier on the budget and helps you better play your financials.

If there are changes in the market situation and the interest rate goes down, you will be paying the pre-fixed rate. Similarly, if the rates go higher, you will have the advantage of paying a lower rate. 

2. Variable Interest Rates 

As the name suggests, in variable interest rate mortgages, the rate changes throughout the tenure of the loan based on the market conditions. If the market rate goes down, you may end up with a profitable deal. But if the market rate increases, you will be paying a higher rate for your mortgage. This type of loan is ideal for people who possess financial liquidity to handle altering repayments. 

3. Capped Mortgage 

You can also take a capped mortgage in Dubai, where you have some advantages. While you will continue to make repayment at variable rates, the maximum cap is set prior to the loan term starts. Moreover, generally, the capped period can be for a predetermined, limited time. The rate of interest moves up based on market conditions, but a certain limit is set beyond which the interest rate will not increase. 

4. Discounted Rate Mortgage 

In this form of loan, you will be paying a lower amount as financial assistance is offered on the variable interest rate you are paying. However, the discount is only for a short period, and after that, you will pay interest on a variable basis. 

5. Offset Mortgage 

You can integrate your mortgage account with your savings accounts or the credit card of the same financial institution. An offset mortgage is offered by limited banks in the UAE. You can connect your savings account, credit card account, current account under this form of a mortgage.

So your loan repayment can be taken from any of these linked accounts. And by periodically offsetting the amount, you may end up paying a lower interest rate. 

Who Can Get a Mortgage In Dubai?

Whether you are looking for a townhouse or villa or inclined towards an apartment, you can buy a mortgage in Dubai, considering you meet the eligibility criteria. To apply for a mortgage in Dubai, you have to be:

• Based between 21 and 65
• A UAE resident or national
• Employed with a monthly income of AED 15K or self-employed with AED 25K monthly income

Expats can also get a mortgage in UAE; however, there are certain constraints. According to the UAE Mortgage Cap law, expats have to pay the down payment of 20%, which is 15% for UAE citizens, in addition to associated purchase costs. The down payment requirement for non-UAE residents varies based on the property. 

What Documents Are Needed To Acquire Mortgage In UAE?

Individuals who wish to purchase property in the UAE must apply for one. The document requirement may slightly differ from one back to another, but generally following are the documents needed by the banks to apply for a mortgage in Dubai:

• A copy of Emirates ID
• A copy of passport and visa 
• Proof of residences such as DEWA bill or tenancy contract 
• A salary certificate for employment proof
• Bank statements and payslips of last six months 
• The latest credit card statements

How To Acquire A Mortgage In Dubai?

Following are the steps that you need to follow in order to acquire a mortgage to finance your home:

• Look For A Lender 

In UAE, home mortgages are taken through banks that are registered with the Dubai Land Department (DLD). You can contact the bank directly and enquire about their available mortgage offers.

Another option is to hire a broker and let him or her work for you to provide the best mortgage in the UAE. 

Brokers have strong knowledge and insight into the local market and the best home loans that could be ideal for you. This way, you can focus your time and effort on finding the right home rather than getting caught up in the strenuous mortgage process. 

• Selecting The Appropriate Mortgage 

As we mentioned above, there are different types of mortgages in the UAE. You must consider different factors when determining the type of home loan that is right for you. Some of these factors include your lifestyle, the loan amount you require, the type of property, the cash deposit you can manage, etc. 

Generally, banks have their mortgage calculators online, through which you can get an estimate of your monthly installment by adding your variables. 

• Acquiring A Pre-Approval Letter 

The most important step of the whole process is getting the pre-approval letter. It is basically an official document issued by the bank. A pre-approval letter is an evidence that certifies that you are eligible for acquiring a mortgage. The letter highlights the maximum loan amount, providing greater certainty of acquiring the mortgage. Generally, it takes three to five business days for banks to send the pre-approval letter. 

• Choose Your Home 

After receiving the pre-approval letter and deciding on a budget, you can start looking for your dream home. Pre-approval letters are valid between 60 and 90 days based on the lenders. Therefore, you have sufficient time to look for the property that you wish to buy. 

At times people have already found their property, and then they apply for the loan. But in this case, there are chances that they might not be able to secure the entire amount of the home value.

• Finalize The Purchase Of The Property 

After selecting the property, you can go to the bank to finalize the mortgage agreement. The bank will appoint a property evaluator to assess the value of your property and then make an offer on it. Once the price is agreed on, you can go ahead with the deposit and decide a date for completing the transaction. On the day of the property transfer, the bank will release the loan amount to the seller. 

UAE offers plenty of opportunities to take a mortgage if you are eligible. There are many banks with interesting rates as well. It is important that you must be well aware of the real estate market to make well-informed decisions. And once your loan is approved, ensure that you pay the EMIs timely; otherwise, you will land yourself in big trouble.