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Applying For A Mortgage In The UAE: A Guide For Expats

The United Arab Emirates has always been one of the most welcoming nations for foreigners. The country accepts workers from different parts of the world for various industries and positions. 

The UAE also welcomes foreigners interested in opening a business within the country.

In 2019, the UAE implemented a new law granting foreigners the right to own properties within the country. Because of this, it is now considered one of the friendliest nations for expats in the world.

Due to this law, if you are working or own a business in the UAE and have always wanted to own a home here, you can do so now.

Buying a Home in the UAE With a Mortgage

Getting a mortgage is the most cost-efficient way of owning property in the UAE. With this option, you can enjoy more financial flexibility.

Mortgages are readily available to foreign borrowers looking to buy a property in the UAE. Because of this, you won’t need to worry about preparing a substantial amount of outlay for this endeavour.

For expats, using a property mortgage calculator in the UAE is the first step to getting a loan for buying a home here. It is an excellent starting point for knowing how much you have to prepare for this type of investment.

Additionally, as a foreign investor, there are other important things you have to know when getting a mortgage in the UAE. Below are the most crucial ones:

1.You have to meet several requirements.

To qualify for a mortgage, you have to meet certain requirements. Although these may differ per bank or loan provider, the standard ones for expats are:

  • Stable income, with a minimum salary of AED 10,000
  • Working or earning income in the UAE for at least six months or a year, depending on the lender and area where you are buying a property
  • Good credit rating
  • Minimum age of 21 years old

You also have to prepare several key documents, such as a copy of your passport, proof of your residency and current address, bank statements, employment certificate, and payslips.

As mentioned, different banks and mortgage providers have varying requirements; some may require more, and others, less. Study all of them thoroughly to ensure you meet them before pushing through with an application.

2.There are two main types of mortgages in the UAE.

Mortgages in the UAE are classified as either fixed rate or variable rate.

Fixed rates are usually offered for one to five years, sometimes longer, after which they go back to a variable rate. This is calculated based on the Emirates Interbank Offered Rate or EIBOR plus a margin set by the mortgage provider.

Since the rates are fixed, they are simpler to calculate and provide peace of mind. However, it may cost you more in the long run.

On the other hand, variable rates are market rates that depend on EIBOR rates. The payment terms are generally set at 25 years or longer.

These mortgages can be further structured by flat or reducing rate.

Flat rates are calculated based on the whole amount of the loan during the agreed-upon tenure. This guarantees a straightforward calculation of monthly payments. However, it can be more expensive in the long run.

Conversely, reducing rates are calculated based on the remaining balance of the loan. They can be complex to compute but are often more affordable.

3.The deposit varies based on the property you want to buy.

If you are interested in purchasing a property worth AED 5 million and below, expect to pay a deposit of at least 25 percent. More expensive homes require a deposit of at least 35 percent.

You have to pay a higher deposit if you are buying a property to rent out. A buy-to-let mortgage usually requires a down payment of 40 to 50 percent.

Mortgage providers put a cap on borrowing in different ways. However, foreigners with good credit standing can acquire mortgage loans of up to 80 percent of the property’s value.

4.Practice due diligence when applying for a mortgage.

You can apply directly to a bank or loan provider for a mortgage. Make sure you compare the rates, terms, and conditions carefully before applying for one.

Use a mortgage calculator and comparison websites to get and compare all key details.

You will also do well to get an agreement in principle before applying for a mortgage. This is a document that states the provider is giving you basic approval for your loan before you find a property.

The agreement in principle allows you to know the exact amount you can offer for a property without going beyond your budget.

Don’t forget that mortgage brokers can help you apply for a loan. They can help you understand the local property market and with the application process.

Moreover, they can streamline your mortgage application and increase your chances of getting approved.

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