How to Buy a Property in the UAE with a Mortgage in 2022

How to Buy a Property in the UAE with a Mortgage in 2022

01.01.2022 (updated 01.20.2023)

  • AX Blog
  • How to Buy a Property in the UAE with a Mortgage in 2022

Natives and foreigners alike can purchase real estate in the UAE with a mortgage. We will tell you how to obtain a home loan in Dubai, what documents are needed for this purpose, as well as how to apply for a resident visa after acquiring a property.


Mortgage Loans for Foreigners – the Key Requirements

In the UAE, registration of a mortgage for foreign citizens involves the following conditions:

  1. A person must be at least 21 years old at the time of signing the contract with the bank.
  2. The upper-age limit may vary, but as a rule, this limit should not exceed the age of 65 for employed persons and the age of 70 for self-employed people.
  3. The period for the loan to be issued cannot be more than 25 years or less than 5 years.
  4. The mortgage amount cannot be more than 75-80% of the home price for residents and more than 50% for non-residents.
  5. The mortgage rate will be 3–6.5% a year, depending on the bank.
  6. In Dubai, mortgage payments must not exceed 50% of the applicant’s monthly income.

How to Take out a Mortgage in Dubai if You are a Foreigner

When applying for a mortgage in the UAE, the rules for non-residents are almost the same as those for locals. However, there certainly are specifications. Non-residents will have to pay a larger down payment of 50%, compared to the 20-25% expected from residents. Also, some banks have higher age limits for non-resident applicants, who must be at least 25 years old. In addition, the fact that the loan rate for non-residents will be higher is among the other factors for obtaining home loans in Dubai.

Necessary Documents for Obtaining a Mortgage in the UAE

Applicants have to provide the following set of documents to the bank:

  • A mortgage application form;
  • A photocopy of the passport;
  • A photocopy of the visa and Emirates ID (if any);
  • For residents: proof of residence in Dubai, including a copy of the rental agreement or DEWA utility bill;
  • A copy of a bank statement for the last six months;
  • If the borrower is employed – a certificate of salary from their employer;
  • If the applicant is a businessman – company documents, a certificate of registration, and a report from an audit firm on the financial position of the legal entity.

The bank may also require for tax declarations, your credit history, and information about current loans. The application will be processed within two weeks. If a positive decision is made, an agreement will be drawn up with the candidate.

Next, the real estate transaction is registered with Dubai Land Department (DLD). It is worth noting that this can be done instead of both parties being present. The legal representatives of the buyer and/or seller can attend the registration. A power of attorney for a representative is then issued at a notary office.

Next, the property transaction is registered with the UAE Land Department. It is worth noting that this can be done instead of both parties being present. The legal representatives of the buyer and/or vendor can attend the registration. A power of attorney for a representative is issued at a notary office.

Additional Expenses when Applying for a Mortgage

The buyer will be required to cover some expenses during the loan process:

  • A down payment.
  • Life insurance of the applicant (0.3%-0.8% of the total loan amount).
  • A fee for evaluating real estate – is 2,000-5,000 AED (545 – 1,400 $).
  • A bank fee for arranging a mortgage – between 0% and 1.5% of the total amount depending on the credit institution.
  • A commission of 0.25% of the amount + 290 AED (80 $) for mortgage processing in the Dubai Land Department.

Obtaining a Visa After Buying a House

After purchasing a home worth AED 750,000 ($ 204,000), you can apply for a three-year resident visa. However, if the unit is more expensive and is purchased with borrowed funds, this amount of AED 750,000 must be deposited in the bank as the first payment and must be personal savings.

If you own multiple properties with a total value of AED 750,000 or higher, you are also eligible to apply for a three-year resident visa.

Investors who have made real estate investments of a minimum of AED 2 million ($544,500) can receive a Golden visa. This visa is issued for 10 years in all emirates, except for Abu Dhabi, where it will be valid for 5 years. The rules for mortgage real estate are similar:

  • the program applies to mortgage-financed properties;
  • a down payment of at least AED 2 million is required.

Mortgage in the UAE: Features

Many local banks do business per Sharia law, which prohibits charging or paying interest. However, local financial institutions have found a way out of this situation.

Firstly, there is the concept of “Murabaha”, whereby the client selects the property of his interest and informs the bank. This bank buys the property and immediately sells the villa or apartment to the investor using installment plans, but with a certain margin.

Secondly, there is the concept of “ijara”, whereby an investor selects an apartment, then the bank acquires it and rents it out to the client. It means that the buyer does not become the owner, but rather the tenant. In this case, the payment for accommodation depends on the market’s average dynamics of price changes. The main advantage is that if a bank client does not have enough money to buy, he still has the opportunity to live in the apartment for as long as he needs. However, this requires regular rental payments. If rent is paid regularly, no one can evict the tenant – this is why ijara is different from an ordinary lease.

For people who have a permanent source of income in the United Arab Emirates, it is easier to take out a loan to purchase a villa or an apartment. However, some financial institutions issue loans secured for property to foreigners. It is also possible to make a bank deposit, as a down payment, of as little as half of the property’s price. After that, the mortgage is likely to be approved.

Start house-hunting for a villa or apartment in the UAE today! The real estate agency in Dubai AX CAPITAL database contains plenty of offers for the sale and rental of real estate in the Emirates. Our staff will be happy to help you choose property in Dubai and the UAE, as well as provide legal assistance in preparing the necessary paperwork. With us, buying or renting a home in the United Arab Emirates is profitable, safe, and easy.

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