Question & Answers
As a general rule of thumb, the limit is calculated at 7x the annual salary of the applicant but it also depends on the bank. If the customer already has loans, credit cards and existing liabilities, then this ultimately affects the maximum amount they can borrow.
Rates differ greatly between bank to bank and will all depend on the customer's individual profiling and whether they're salaried or self-employed.
For expat residents (first-time buyer): 20%
For UAE nationals (first-time buyer): 15%
For expat residents (second-time buyer): 40%
For UAE nationals (second-time buyer): 35%
There are exceptions to the rules though, some of the banks allow 2nd-time buyers, 20% and 15% deposits for expats and locals, respectively, if their existing mortgage is under 60% LTV.
This varies from bank to bank but normally banks will reply with initial observations and requests within 2 working days. Once additional documents have been provided, or additional questions have been addressed, the turnaround time to receive a pre-approval is usually between 5-7 working days.
The maximum Tenor of a mortgage is 25 yrs, this may be lower depending on your age.
The minimum age requirement for a mortgage in the UAE is 21 years and the maximum age is 65 years for salaried and 70 years for Self-Employed.
The down payment requirement is regulated by the Central Bank. For completed properties it ranges between 20% to 40% of the property value, depending on UAE Nationals / Expatriates, Self-Occupancy / New Mortgage. For under construction properties 50% down payment is required.
Banks offer mortgage for UAE Residents – Nationals and Expatriates can avail of a mortgage. Certain Banks in UAE also offer loans to Non Residents.
Mortgage Life Insurance is an excellent product to ensure that your family / dependents are not burdened and would not have to pay for the mortgage installment in case of your demise.
Yes, subject to individual client profiling as always. Maximum loan-to-value available for non-residents would be 60% funding.
GLOSSARY
This is the break-up between interest and principal of the instalment paid through the tenor of the mortgage.
It is common in UAE for Banks to offer a Fixed Rate Mortgage for a specified term, post which the mortgage will convert to a Variable Rate Mortgage.
These are all properties which are not residential and include office premises, retail shops, ware-houses, industrial sheds, labor camps & commercial plots.
A client may choose to buy his own content insurance; this is not a mandatory requirement and it only covers the contents within the property and not the property.
This is another common terminology used and it defines the ratio between the total monthly debt repayments and the income. This is regulated by the UAE Central Bank and is capped at 50% of the Income.
The money that you pay up front for a house. Minimum down payment requirement is regulated by the UAE Central Bank and it ranges from 20% to 40% of the property value for completed properties . For under construction properties it is 50% of the property value.
This is a Government Department which provides various services related to the real estate transactions, most notably the documentation of sale transactions, regulation and registration of all transactions.
Depending on your mortgage agreement, there may be a prepayment cost for pre-paying. The maximum fee a Bank can charge is regulated by the U.A.E Central Bank.
Repaying your mortgage ahead of schedule. This could be extra payment which will reduce the amount of mortgage principal or a full repayment of the loan.
This is an interest rate that does not change during the entire mortgage term.
These are a much wider range of areas where a UAE or a GCC national can purchase a property across U.A.E.
These are designated areas in Dubai where foreign nationals are permitted to purchase properties. Free hold areas are defined by the Dubai Government by the order number 3 of 2006. Similarly, there are designated areas in each of the emirates, however they may defer in the freehold ownership structure.
Similar to the Freehold, these are areas where foreign nationals are permitted to purchase properties. However, the property is on a long term lease, usually 99 yrs and the leasehold rights are recorded with the Dubai Land Department under a Lease Deed.
Also known as Equity Release. This is when an individual or a company owns a property without any mortgage and has a requirement of funds and avails of the loan by mortgaging this property.
This is a common banking terminology and it defines a ratio between the Loan Amount and the Property Value. This is regulated by the UAE Central Bank and ranges from 60% to 80% for completed properties. For under construction properties LTV is 50%.
A loan that you take out on a property. The collateral is the property itself and the loan could be for any purpose.
This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.
This is a formal commitment from the Bank on the loan amount and other terms of the mortgage. This does not include assessment of the property. Usually home buyers take a Pre-Approval from Banks post which they search and are able to negotiate on a property as well as commit on a down payment knowing very well that the mortgage approval has been sorted.
Fee charged by the Dubai Land Department for the registration of the mortgage in favor of the bank which has provided a loan against that particular property.
These are mortgages for foreign nationals residing outside of the UAE and seeking a mortgage for a freehold property in UAE.
This is a fee charged by certain banks at the time of application; most banks adjust the pre-approval fee with the processing fee payable at the time of loan disbursement.
This is the fee charged by the Bank for approval and disbursement of a mortgage.
Insurance to cover the property being mortgaged, this is a mandatory requirement by all Banks in UAE. However, certain Banks permit clients to buy their own property insurance and assign it to the Bank. This is different from the Mortgage Life Insurance.
This is when a client has a mortgage with a particular bank and wants to transfer his mortgage to another bank on better terms. This is usually done by a client when he is on unfavourable terms, which could be Interest Rate, Tenor or Loan Amount and he wishes to negotiate more suitable terms within another Bank.
The fee charged by the Dubai Land Department for the registration of a property in the name of the Buyer / Owner.
The total number of years of the mortgage. The maximum tenor of the mortgage is regulated by the UAE Central Bank.
When a property owner has an existing mortgage and he avails of an additional loan on the same property. This is possible when the loan outstanding is low or when the value of the property has appreciated. The additional funds can be taken to fulfil the requirement of the property owner.
This is the fee paid to the Bank for obtaining a valuation of the property. The valuation is done by an external certified valuation company.
An interest rate that will fluctuate in accordance with the prevailing market prime rate during the mortgage term. The Prime Rate could be EIBOR or Banks internal lending rate. Banks charge a mark-up rate over and above the Prime Rate. This usually remains constant during the variable rate period.