All You Need To Know About Home Loans in UAE for Expats

The UAE is the ultimate gateway for many expats for better living standards and atmosphere. If you are wondering whether you can apply for a home loan in UAE or not, the answer is yes.  

Through this article we will answer all the questions you have regarding this topic; read below to own your home in the UAE.

home loan in UAE

1. What Is a Home Loan or Mortgage in the UAE? 

A home loan or mortgage is to borrow from a bank or an official lender an amount of money to buy a property when you don’t have enough cash. Home loan in the UAE is also known as home finance.

Moreover, you pay this amount in addition to the rate of interest according to the bank or the lender through monthly installments.

2. Can Expats Get Mortgage in UAE?

Absolutely! Both expat residents and non-resident foreign investors can secure a mortgage to finance their property purchases throughout the UAE, including Dubai. Local banks and financial institutions offer various home loan options tailored specifically to cater to the needs of expatriate buyers.

3. What Is the Minimum Amount of Down Payment for a Home Loan in the UAE for Expats? 

The minimum amount of a down payment for a home loan varies according to the price of the property. However, expats usually pay a minimum of 15% of the total unit price as a down payment.

4. What Is the Main Factor on Which a Bank or Lender Decide the Loan Amount? 

The loan amount is calculated according to different factors but most importantly is your salary; this is what guarantees covering the loan amount during the whole period.

Each bank assigns the minimum salary accepted, its rate of interest, and accordingly the total amount of loan it will offer, depending on each case. Then you should choose the best deal for you which suits your budget. 

Besides, among the banks of the UAE, usually the one with the lowest mortgage rate is always the to-go option. 

best mortgage rates in UAE

5. What Are the Types of Home Loans or Mortgage in the UAE? 

There are different types of home loans in the UAE which vary according to the rate of interest; it’s the main and most important factor on which you should decide whether the deal is good or not. 

The types of home mortgages in the UAE are: 

  • Fixed Rate Mortgage. It’s the basic one where you agree on a specific percentage for the rate of interest before the loan period starts. 

    It’s a good option as it won’t be affected by any future circumstances; this enables you to calculate the specific amount you’ll pay in each installment during the whole period without any variance. 
  • Variable Rate Mortgage. As its name suggests, this type is with a changeable rate of interest. It differs according to the market or any new regulations. 

    It’s a double-edged option as the decrease or increase are unpredictable. Just make sure you’re financially stable before choosing this one to be able to cover any increase.
  • Discounted Rate Mortgage. Here you are offered an amount of discount with a specified percentage by the borrower during the first months of the loan term. 

    You should decide whether this type is suitable or not according to the amount you’ll pay after the discount period ends, or it’ll be a tricky option.
  • Capped Rate Mortgage. This one has a slight similarity with the Variable Rate Mortgage, as the rate of interest is not fixed; however, you agree on a maximum rate of interest before the loan period starts. 

    Whatever changes happen in the market the rate of interest won’t exceed the agreed upon maximum limit. 
  • Remortgage. Such a type is perfect in case you already applied for a loan and you need an extra one during the ongoing loan.
  • Offset Mortgage. This new option allows you to connect your loan, savings, and credit accounts together. Consequently, whenever you get extra money on any of the accounts, the total interest amount gets reduced. 
UAE mortgage rates

6. What Are the Eligibility Conditions to Get a Home Loan in the UAE? 

There are some conditions that must be met to apply for a loan. Check below the home loan eligibility conditions in the UAE: 

  • You should have been for six months or a year at your current job 
  • For business owners, your business should have been operating for two years
  • You should have a clean credit history to get your loan easier as this shows that you’re a trustworthy person
  • If you didn’t have a credit card before, you should think about having one and start using it. Just make sure to pay it every month on the due date to create a clean credit history. 
home loans in UAE for expats

7.How Can You Estimate the Home Loan Amount in Dubai?

  • For properties valued at AED 5 million and below: the maximum amount you can borrow is 80% of the value of the proper.
  • Properties valued above AED 5 million: the maximum amount you can borrow is 70% of the value of the property.
  • For the purchase of second or investment property: the maximum amount you can borrow is 65% of the value of the property, applicable to a ready property only.

8. What Is the Down Payment Amount for Home Loans in Dubai?

You have to pay a down payment of no less than 15% in most cases when applying to loan amounts provided by banks and funding agencies. This step is taken to prove to the funding party that you’re capable of covering future costs.

Moreover, some banks may allow you to add a small amount of purchase costs to your mortgage to have more cash liquidity to add to the down payment. This, in turn, enables you to buy a higher-cost property.

However, if you use all of your savings to buy the property, you may face difficulties in paying the mortgage installments at the beginning or halfway through. 

For this reason, some banks 

  • Allow you to defer mortgage payments for up to 6 months.
  • Others provide the option of financing without a down payment, which helps you to manage your finances before starting to pay installments.

So, if you’re planning to buy a property, be sure to consider all the available options and choose the one that suits your financial situation best. And remember, owning a property is a great investment and a long-term commitment.

9. How Can You Save to Pay Your Down Payment?

Saving some cash for your down payment might be challenging, but it’s not impossible. Find below some tips for Saving for a Down Payment:

  1.  Start saving several years before purchasing a property.

Try to have an idea of the type of home and residential complexes you want to buy to get an approximate value of the savings you need. You can do this by following these steps:

  • Open a savings account and allocate a certain amount of your monthly income for this purpose
  • Accelerate your saving process and spend carefully
  • Monitor your spending on grocery shopping, bills, and utilities
  • Reduce your entertainment expenses and eating out
  1. Transfer any savings or investments abroad to the UAE

Use fixed exchange rate currencies as they can often save you money when exchanged at higher rates than bank rates.

  1. Release any property mortgages in the UAE or abroad

You can use the property mortgage as a financing option to purchase another property.

Remember, saving for a down payment requires discipline and planning. By following these tips, you can achieve your goal of owning a property and enjoy the benefits of long-term investment.

10. What Is a Mortgage Agreement in Principle? 

A mortgage agreement in principle is an initial or basic approval from the bank on your loan. It will help you while searching for the property you want to reach a suitable deal according to the budget you’re given. 

11. What Are the Documents Needed for a Home Loan? 

There are some documents you should prepare to apply for a home loan in the UAE as an expat:

  • A proof of your salary 
  • Copy of your passport 
  • A proof that you’re living in the UAE
  • A bank statement for the last 3 or 6 months 
  • A proof of your current address 
  • For business owners, a trade license. 
home finance UAE

12. What Is the Process for Applying for a Home Loan in the UAE? 

The application process for a housing loan in the UAE is easy; just follow the below steps:

  1. Choose whether dealing with a bank directly or indirectly through a broker
  2. Pick the mortgage option that suits you
  3. Get a mortgage agreement in principle or a letter that proves their acceptance
  4. Search for the unit you want and reach the optimum deal 
  5. Upon settling on a price, pay the deposit to confirm the purchase and the completion date 
  6. The bank or loan lender will pay the amount by the completion date. 

13. What Are the Banks with the Best Mortgage Rates in the UAE?

Those are the most notable banks in the UAE with the best home loan offers. 

  • HSBC 
  • Mashreq
  • The Commercial Bank of Dubai (CBD) 
  • The United Arab Bank (UAB) 
  • Emirates Islamic.

14. What Is a Home Loan Calculator in the UAE?

A home loan calculator is a service or a feature which is available on different websites. It  enables you to estimate the monthly installment you will pay according to the home loan you want to have. 

It’s a good step before you start the procedures of the home loan in the UAE to be aware of all the details before taking the decision. 

You can calculate your home loan amount through the Mortgage calculator on Property Finder. 

mortgage loan UAE

15. Is Property Insurance Important While Having a Home Loan in the UAE?  

Yes, it is. In the UAE, property insurance is mandatory while taking a home loan. You are free to buy the unit and its content as a package or separately; it’s according to your preference.

The insurance policies in the UAE are affordable to avoid any future loss.  

16. What Is Mortgage Refinancing in the UAE? 

Mortgage refinancing is switching to another deal while your loan term didn’t end yet. This is due to the competitiveness between the borrowers so they always try to provide you tempting offers. 

17. Can You Do Mortgage Refinancing in the UAE? 

Yes, you surely can do this; if you decide to switch to another deal, just contact your bank to start the procedures.

The UAE offers you all the facilities and regulations for a better living standard. Now after you have known all the information regarding home loans in the UAE, finally you can own your sweet home. 

You can check the properties for sale in the UAE on Property Finder to have your dream home.

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