Mortgage loans for foreigners in Dubai

The United Arab Emirates is at the top of the list of countries that is the most valued by foreign investors. In fact, it’s one of the most popular Emirates in Dubai. Especially since here, one can purchase a property either with cash or credit funds. Favorable mortgage rates in the UAE are real estate in Dubai available.

Why is a mortgage in the Emirates preferable to renting?

In a country with an increased demand for real estate, the ROI is quite high. It allows you to rent an apartment and earn an income of between 6 to 10% per year. So it makes no sense to rent an apartment long-term. Also, the budget shortage is not a reason for the purchase refusal. You can purchase a property in Dubai with borrowed funds and compensate for the mortgage payments by renting out the property.

Requirement for mortgage registration in the UAE

There are no restrictions on purchases concerning the bank’s funds. So you are free to choose whatever you want, be it a compact studio apartment or a spacious villa. Additionally, a mortgage in the UAE is provided for any type of real estate. Therefore, it’s possible to purchase not only ready-made apartments but also off-plan projects as well. Although, this requires that you provide the necessary project documentation for a property commissioning no later than two years from the date of loan receipt. Furthermore, the applicant only needs to meet the key requirements that are imposed by credit institutions for foreigners.

Types of mortgage loans in Dubai

The process for registration and payments is directly linked with the bank. As such, financial institutions offer two of the most common options for foreigners, namely, fixed-rate mortgage and mortgage with a “floating” rate.

Fixed-rate mortgage

This is familiar to Europeans, especially when the rate is announced at the stage of signing the contract. More specifically, it’s stable and not subject to further change during the entire loan repayment period. What’s more, several banks might even offer one conditions under which the rate remains unchanged for a certain period.

Real estate in the UAE for a mortgage with a “floating” rate

This rate changes daily and directly depends on the economic situation in the country, as well as, how the country’s Central Bank (Eibor) responds to it. Usually, this starts from 2.5% onward, which is often less than that of a fixed option. However, the disadvantage here with this is the unpredictability. More to the point, because this rate constantly fluctuates, it’s impossible to calculate the payment costs in advance.

How can a foreigner get a mortgage in Dubai?

This process requires that the applicant prepare the necessary documents, as well as, meet the following requirements:

  • Own life insur
  • Be above the age of 21.

The age limit hasn’t been legally established yet, but most banks refuse people over the age of 55.

Furthermore, it’s also necessary to have a resident visa as this simplifies the process for obtaining credit funds. Also, once you’ve done this, you can own real estate on the property of the state, study at local universities, or be officially employed.

Mortgage loans for expats in Dubai

Mortgage loans are legally available for expats in Dubai. However, it’s not always easy to independently understand the particulars of local legal norms. Therefore, it’s much safer and more effective to use the services of professionals who will not only help you with the decision-making process but also assist you with the necessary paperwork.

Required registration documents

To apply for a mortgage loan, you need to have the following documents:

  • Copy of your passport and resident visa.
  • UAE bank account statement.
  • Income certificate when working for hire, as well as, the employer characteristics.
  • Constituent company documents, if commercial real estate is being purchased.

Based on the results of these documents the financial institution decides on the issuing or refusal of borrowed funds. This process can take up to 90 days. In many respects, the result depends on the client’s credit reputation and his/her creditworthiness.

Ways for non-residents to obtain a mortgage

Most often, the lack of a residence permit is the reason for a mortgage loan refusal. And while there are several examples of when foreigners received a mortgage loan without a visa, these cases were isolated and included residents of the UK and Arab countries. So the simplest way to obtain a mortgage loan is to obtain a resident visa.

Mortgage restrictions for non-residents

In addition to the lack of a resident visa, one’s business reputation and creditworthiness remain the basic criteria for judging this. Al Etihad Credit Bureau operates in the state. So with this institution’s help, the bank can access the credit reputation of each of the clients. Furthermore, the following reasons can be grounds for a refusal:

  • Negative reputation.
  • No confirmed
  • Age between 50-55 years.

The latter criteria are dependent on the specific bank. Creditworthiness assumes the ratio between available income and debt obligations. What’s more, according to local legislation, you can apply for a mortgage in the UAE if the total loan amount does not exceed 50% of your income. So after payment, each family member should have an income of at least AED 3 500 per month.

Mortgage payments in the UAE

It is very important to comply with the deadlines that are set out in the contract. So for instance, if the mortgage payments are overdue for more than 30 days, the investor’s credit reputation may be damaged by an entry in the personal file from the lender. As a result, the subsequent receipt of borrowed funds will become problematic. Furthermore, if the debt is not paid, the consequences are similar to those that occur in Europe. Where legal proceedings with a high probability of deportation from the country. However, before that, you will need to pay off all your debts.

Mortgage payments in Dubai

This is regulated by the legislation norms in the country. Additionally, the possibility of early repayment is provided. However, in this case, the client will be fined 1% of the total loan amount. It cannot be lower than AED 10 000. As such, it is more profitable to plan the number of payments and the time it will take to pay it off in advance.

Mortgage payments in other cities of the UAE

This is carried out in accordance with the contract terms. Also, it’s important to remember that expats can purchase real estate only in the corresponding “freehold” zones. This doesn’t include each area of the major cosmopolitan cities., But in general, it still allows for a wide array of choices where one is guaranteed to find an option available for every available taste and budget.

Mortgage rates in the UAE

This needs to be studied at a specific credit institution, since the amounts may differ. On average though, these figures can range from 4.5 to 9.5% per annum. Also, banks lend money for a period of at least five years. And while the maximum term is 25 years, this does depend on the age of the borrower.

Banks with the most favorable rates

The mortgage loan program for Europeans in the UAE is offered by many financial institutions. What’s more, it’s important to understand that each of these clients is considered on an individual basis. So the chosen real estate, its cost, as well as, creditworthiness are all taken into account. Below is a list of some of the largest and most popular banks that work with foreigners:

  • HSBC Bank – is ready to provide foreigners with the missing funds in the amount of 50% to 60% of the total real estate cost.
  • ADIB Bank – Allows one an opportunity to grow one’s investment from 10 to 50% of the total real estate price.
  • Dubai Islamic Bank – Their individual approach to each client allows one to feel secure and expect an amount of up to 75% of the total real estate price in the contract.
  • Mashreq Bank – It has a maximum loan limit of 65%.

Maximum mortgage lending

This is calculated taking into account the required amount, the business’ borrowing reputation, and its creditworthiness. Although, it should be noted that the largest loan amount cannot exceed more than 90% of the purchasing cost. Furthermore, the borrower must have funds to pay the down payment, including any additional registration fees.

Is it worth investing in real estate with borrowed funds?

UAE real estate has many advantages, including:

  • Modern design – It is appreciated for its comfortable living conditions.
  • High liquidity – The high demand allows you to sell it, if necessary.
  • Cost increase – It is more profitable to pay the entire cost. Moreover, you can pay via installments.
  • Price – If you compare real estate in Dubai with other major European cities, you can ensure that your purchase is profitable.
  • No taxes – Ready-made properties can be rented out, at the expense of which mortgage payments can be repaid.

Our assistance in purchasing real estate in the UAE

Our company will assist you to obtain a mortgage in Dubai when it comes to purchasing any residential or commercial property. What’s more, our experts/consultants are ready to advise you on any issue. Whether it involves the choosing of a property e or the acquisition, we’ll be there to guide and support you all the way. Real estate agency in Dubai offers the most up-to-date ads from developers. Don’t delay! Purchase your dream studio or apartment today. Especially, since analysts are predicting a growth in cost where this is concerned. Visit our website right now and be in the know about all the latest properties we have to offer.