8 Things to Know Before Getting an Expat Mortgage in Dubai
Is it hard to get a mortgage in Dubai? What’s the minimum salary for a home loan in UAE? Deciding on your first home can be difficult, but knowing a few tips before applying for a mortgage in Dubai can prepare you to make better investment choices.
Here are 8 things to know before applying for a mortgage so you can make a confident decision when buying a property.
1. How do I qualify for a mortgage? (Salaried / Self-employed mortgage Dubai)
- Minimum monthly salary of AED 15,000. Self Employed AED 25,000.
- 6 months of employment at your current company
- Have the down payment funds of at least 20% on property valued at AED 5 million and 30% on property valued over AED 5 million. Off-plan will be at 50%.
- Age limit between 21 years – 65 years old. 70 if self-employed.
2. How much deposit do you need for a mortgage in Dubai?
The minimum down payment in the UAE is 20% of the property value, and there will be additional upfront costs and fees of 7%-8% of the property value.
Some banks can include financing the upfront fees (about 5%) in your mortgage loan. Ideally, you should have at least 22%-23% of the property value saved up as your down payment.
3. How much ‘Home’ can I borrow?
The amount you can borrow for a property depends on a few factors:
- Your overall income and salary
- Any housing allowance
- Your existing debt (car loan, credit cards, other personal loans)
- Family status (single, married, any dependants)
- Nationality (non-UAE national 80% LTV, national 85% LTV)
- Your age (Age limit for a mortgage is 21 years – 65 years old if expat, 70 years if UAE national or self-employed)
Tip: Use this Dubai mortgage calculator. We particularly like it as it calculates all the up-front costs, shows you the recurring monthly cost, and customizes your service charge based on the size of the property.
4. What’s a mortgage pre-approval?
It is an approval letter issued from the bank that guarantees your eligibility for a home loan. It highlights the maximum amount you can borrow from that bank.
Keep in mind, banks have their own criteria to access their risk and determine how much they can lend you, so your maximum loan amount may vary from bank to bank.
Buying “too much home” can quickly turn your home into a liability instead of an asset. Know how much you can afford before you ever start looking at homes.
5. How to find best mortgage rates in Dubai?
Mortgage brokers like Mortgage Finder and Hupsy have working relationships with the banks in Dubai and have access to the best and latest mortgage rates. Some property brokers may also have their own mortgage advisors internally to facilitate the mortgage process. They help you get pre-approvals, compare interest rates and bank offers, and submit your applications, so you don’t have to spend the time to contact each individual bank for their rates, or handle the tedious paperwork.
For a quick glance, we like Yalla Compare as it provides the latest mortgage rates based on your profile, along with specific categories you can select such as bank name, and features including free evaluation and Islamic mortgage.
Tip: Avoid using the same bank for your mortgage and for receiving your salary. Once you resign, the bank will immediately freeze your end-of-service benefits or the whole account in some cases. If your bank has a better deal, change your salary account to another bank.
6. Can I get a mortgage for an off-plan property in Dubai?
To qualify for an off-plan mortgage, the off-plan property needs to have a handover notice or at the handover payment stage. A handover payment is the final payment you make to secure your off-plan property purchase. Each developer has their own payment plans, hence the handover payment % may vary. For example, if you have paid the developer 50% of the property value during the payment plan period, you can borrow the remaining 50% due upon handover as a mortgage.
7. What’s an Islamic mortgage?
An Islamic mortgage is an interest-free loan. In Islam, a loan is meant to be a charitable arrangement and not a way to earn money. Islamic mortgages allow Muslims, and others, to buy a property while still being compliant with Sharia law. The bank buys the property on behalf of the buyer, and then resells it back to them at a profit. Profit rates are linked to EiBOR rate.
Tip: Do your due diligence and make sure the property is indeed compatible with Islamic mortgage before committing to an offer or paying any fees. Otherwise, it will need to be changed to a conventional mortgage or appeal to the legal team, which will take up more time and resources (i.e. paying more rent while waiting for the outcome).
8. Is it better to have a joint mortgage or keep it under one name?
Question to ask yourself. How will you handle the mortgage payment if your circumstances change? i.e loss of employment, divorce, death. Typically, single name mortgage is preferred if you have plans to purchase more properties in the future.
Once you have a mortgage under your name, you are allowed a maximum of 65% LTV for the next property. Additionally, should you fall into financial difficulties, only one of you will be held legally liable if there is a default.
Joint mortgage is beneficial if it helps with affordability.