How Much ‘Home’ Can I Afford in Dubai? Mortgage Calculator Dubai

Dubai Mortgage Calculator Dubai

Alright, let’s talk about how much “home” you can actually afford in Dubai. It’s an exciting city to invest in, but you have to work on some numbers first. It’s important to know beforehand just how much upfront cash you’ll need and how much you can borrow (e.g. using Mortgage Calculator Dubai) before you begin your search.

You don’t want any surprises later on and end up with ‘too much’ house.

Here, we’ll break it down step-by-step so you can get an idea of what your cost and expenses will be. Knowing your potential property’s monthly expenses will also help you focus on looking for home prices within your budget.

Cash Buyer’s Up-Front Cost

Aside from the property price, you will need to account for associated upfront costs with buying a property.

In Dubai, this is typically 7-8% of the property value.

You have factor in these extra costs:

  • Dubai Land Department (DLD) fees: 4% of the purchase price + AED 580 admin fee
  • Property Registration Fee: AED 2,000 for properties below AED 500,000 or AED 4,000 for above
  • Mortgage Registration Fee: 0.25% of the loan amount + AED 290
  • Real Estate Agent Fees: 2% of the purchase price + 5% VAT
  • Conveyance Fee: AED 6,000 to AED 10,000
  • Home Insurance: Approximately AED 1,000
  • Home Inspection: AED 1 per sq ft
  • Life Insurance: 0.4-0.8% per annum on the decreasing loan balance

We talk a lot more in the details on upfront costs and fee here as well as the future cost associated after you become a homeowner (like your DLD service charges). But basically, you need to add an addition of 7-8% to your property price as the total property cost.

Note: You will also need to factor in wire and exchange rate fees if you plan to transfer funds from overseas. These miscellaneous fees can often add up more than you expected, so plan for them.

Do I Need a Mortgage? Mortgage Calculator Dubai

Now that you know you need 7-8% extra cash added to the property price, can you pay in full cash, or do you need to get a loan (mortgage) from the bank to buy the property?

There are a few options for paying for a property in Dubai:

  1. Cash Purchase:
    • If you have enough funds available, you can pay the full property price plus the additional 7-8% in cash upfront.
    • This means, you don’t need to take out a mortgage loan and pay the monthly interest payments.
    • But, it also ties up a ton of your money in the property.
  2. Mortgage Loan:
    • If you don’t have enough cash to cover everything, you can take out a mortgage loan from a bank.
    • Down payment is the cash you need to pay up-front, a percentage of the home price.
    • For example, the minimum down payment required in UAE is 20% for expats and 15% for UAE nationals for properties up to AED 5 million.
  3. Combination of Cash and Mortgage:
    • The third option is to do a mix of cash and mortgage. Put down a bigger down payment to lower the mortgage amount and interest costs.
    • The minimum down payment required is still 20% for expats and 15% for UAE nationals for properties up to AED 5 million.

At the end of the day, it comes down to how much cash you have on hand, how much you want it to be tied up to a property, and what you’re comfortable with.

Paying in all cash is great if you don’t need the liquidity. But a mortgage can work too, as long as you stick to the rules and your budget. 

Use the 30% Rule

Generally speaking, never spend more than 30% of your monthly income on monthly home payments. This rule safeguards you from overspending.

Let’s say your salary is AED 15,000 a month. Your monthly home payment should be no more than AED 4,500 a month. (This includes mortgage payment, service charges, insurance, etc)

Stick to this amount.

It will help you stay financially comfortable.

Spending more than 30% of your income on your property expenses can put a strain on your overall budget and make it difficult to meet other financial obligations.

Keep in mind:
1. Minimum monthly income requirement for a mortgage in UAE is AED 15,000 (salaried) and AED 25,000 (self-employed). However, we have seen lower monthly income requirements, it really depends on the bank.
2. Under Central Bank laws in UAE, no more than 50% of your total income should be committed to paying off your debts (i.e. mortgage payments, credit card payments, car loans, etc.)

Understanding UAE Mortgage Cap’s Loan-To-Value Ratios

According to Mortgage Cap limits by UAE Central Bank, the minimum cash down payments for non-UAE nationals can range from 20% to 50%, depending on the property type and its value. These regulations on mortgage lending aim to protect both borrowers and lenders.

What this means is that, for example, if you’re a foreigner buying your first property in the UAE, you can typically borrow up to 80% of the property’s value. This means you’ll need to provide a minimum down payment of 20%. For subsequent properties, the down payment requirement increases to 40%.

Here are the LTV Ratios implemented by the UAE Central Bank.

Expats (UAE Residents and Investor Overseas)

 Property ValueMax. Loan-To-ValueMin. Down Payment
First PropertyUnder AED 5 million80%20%
First PropertyOver AED 5 million70%30%
Subsequent PropertyAny Price60%40%
Off-Plan / Under Construction PropertyAny Price50%50%

UAE Nationals

 Property ValueMax. Loan-To-ValueMin. Down Payment
First PropertyUnder AED 5 million85%15%
First PropertyOver AED 5 million75%25%
Subsequent PropertyAny Price65%35%
Off-Plan / Under Construction PropertyAny Price50%50%

How Much Home Can I Afford? – Mortgage Calculator Dubai

Now, we have an understanding of how much cash you need to set aside as a down payment and your monthly property budget, we can figure out how much home you can afford with a mortgage calculator.

We particularly like this calculator as it adds up all the up-front costs, shows you the recurring monthly property payments, and also give you an estimate of how much home you can afford.

Mortgage Calculator Dubai

Let’s go back to our example.

If your monthly salary is AED 15,000, your monthly home payment should be no more than AED 4,500 a month. (This includes mortgage payment, service charges, insurance, etc)

If you are an UAE residence expat, your minimum down payment would be 20% (for a property under AED 5 million).

Let’s say the interest rate right now is 3.99% for a 25 year loan.

After plugging in the numbers…

With a 20% down payment at a 3.99% interest rate for a 25 years loan period, your maximum property price should be around AED 628,000. This is for a 2,009 sq. ft apartment with a service charge of AED 10 / sq. ft.

You’ll need to adjust the property price in the mortgage calculator to figure out which combination works best with your budget. A mortgage pre-approval from a bank or mortgage broker will also help determine properties within your price range and help avoid any potential budget discrepancies.

Bottom line: Stick to your monthly home payment budget. If you can’t afford to buy a property and pay for all these extra interests and fees, don’t buy one yet.

Mortgage Calculator Dubai: Find Out if You Qualify for a Mortgage

Can a UAE residents and overseas investors get a mortgage in Dubai? Absolutely.

UAE residents will need to pass banks’ credit checks and must show proof of monthly income to ensure affordability of loan amount.  

Overseas investors may also qualify for a mortgage when buying property in Dubai, with some restrictions. For example, non-residents can borrow a non-resident loan up to 50% of the purchase price. The criteria for non-resident mortgages in Dubai vary between banks, and factors such as the country of residence and monthly income requirement will be a part of the assessment.

Mortgage Calculator Dubai: Get Pre-Approval Mortgage

If you plan to apply for mortgage, you will need to get a mortgage pre-approval from the bank or a mortgage broker. This pre-approval guarantees the bank will offer you a mortgage later on.

The pre-approval is a must-have, and here’s why:

1. If you don’t have a pre-approval and someone else does, the seller will choose that potential buyer over you. Sellers like serious buyers!

2. Bank may reject to lend you the necessary funds for your new home. This can create a lot of problems especially if you’ve already initiated a buying process with the seller.

3. When you have a pre-approval in place, agents and sellers ‘treat your request’ better and more seriously. They know they can sell their property faster.

To get pre-approved, banks and mortgage brokers will check your credit history and finances to ensure that you have sufficient funds and a good track record of paying back.

The pre-approval will be valid for 60 days.

Next: What Homebuyers Wish They Knew About Mortgages in Dubai

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