How to get a mortgage in Dubai as a foreigner. A full checklist and some non-obvious expenses 2022
How to get a mortgage in Dubai as a foreigner. A full checklist and some non-obvious expenses 2022

How to get a mortgage in Dubai as a foreigner. A full checklist and some non-obvious expenses

Buying an apartment in Dubai and selling it in 2-3 years at 100% profit. Is that not the dream of any investor? With the development of the mortgage lending market, this has become possible even for a foreign buyer. We have collected all the information about getting a mortgage on real estate in Dubai, and now will tell you how to get such a loan as a foreigner. 

Dubai’s real estate market can now becalled truly «hot», and it is not about the hot summer season, but about the number of transactions, which has increased almost threefold over the past year. Apartments and flats, villas and townhouses — all this has turned into «concrete gold», the cost of which is constantly increasing. According to market expert Alexei Slauta, such a high demand for real estate in Dubai is explained quite simply: «this is almost the only way to save money for both Europeans and Russians» (an interview with him can be read here). 

But what if a foreign buyer only has half of the amount needed to buy an apartment? Of course, take a mortgage. So, let’s look into what a foreigner needs to know to get a mortgage on a property in Dubai.

A Mortgage on real estate in Dubai for foreigners. General Conditions

  1. Legal status

If the buyer has the status of a resident IN the UAE, they can apply for a larger mortgage — about 80% of the value of the property. If the borrower is not a resident of the UAE, the amount of mortgage lending may not exceed 50%. 

  1. Age

The next important criterion is the age of the borrower — it can be a person aged 25 to 65 years. At the same time, the maximum term of mortgage lending is 25 years, but the closer the borrower is to retirement age, the shorter the mortgage period will be. An important nuance is that the last mortgage payment must happen before the applicant’s retirement age.

  1. Income level

Another equally important condition is that the amount of monthly mortgage payments should not exceed 50% of the borrower’s income. At the same time, it takes into account not only payments on this mortgage, but also all active loans (if any). An important nuance: after all payments, the borrower must have funds in the amount of $900 for each family member.

  1. Employment in the UAE

This condition is not necessary, but it will be a great bonus if you want to get a mortgage. Having your own company in the UAE also fulfills this condition.

  1. Having property in the UAE

This condition is also optional, but will be another great bonus when requesting a mortgage.

Some less obvious nuances

  1. The area where the property is located

Not everyone knows that there are territories in the UAE in which real estate can be purchased only by a resident of this country. However, there are also territories where foreigners are allowed to buy real estate: these are lands of the freehold and easyhold categories. Be sure to check this information with the seller immediately.

  1. Real Estate construction stage

The mortgage can be issued only for already completed real estate or for those properties whose term of completion does not exceed 2 years from the moment of the mortgage commencement. Depending on the construction company and the stage of construction, the bank can request from 30 to 70% of the cost of the apartment as an initial payment. 

  1. Borrower’s life insurance

Most often, the bank will require the borrower to have life insurance or insurance of loss of their ability to pay

How to choose a bank for a mortgage and what documents you need

Both local and European banks operate in the UAE — each of them has its own mortgage offers for foreigners. It should be borne in mind that any bank will conduct a preliminary check for compliance with all requirements for the borrower. It is important to keep in mind that Dubai banks will check your solvency and business reputation especially carefully; assets, income and other credit obligations will be checked — any unreliable borrowers will be weeded out at this stage.

List of required documents:

  • Mortgage application.
  • Income statement for the last six months and information about your employer, if you are an employee. If you are an individual entrepreneur, you will have to provide the results of the audit for the last year. 
  • A bank statement from the last six months.
  • Information on the composition of your family.

When the preliminary check is passed, the borrower has about two months to search for the desired property. As soon as the apartment or house is found, you must make an initial payment in the form of a check and sign a document confirming your intention to buy this property. Only after that will the bank appoint an independent expert to determine the actual value of the property and make a final decision on the loan.

Less additional expenses:

  • The bank’s consideration of the loan application is 1% of the cost of the property.
  • Insurance for the transaction is 0.5-1% of the value of the property.

After the transaction in the Land Department of the city, the buyer will be issued a certificate, the original of which will be kept in the bank until the loan is fully repaid. The borrower will have a certified copy on his or her hands.

Bid Amount

  • Loan rates for real estate in Dubai start at 2.5% (but, for non-residents, banks are more likely to offer rates from 3.5%).
  • The loan term is up to 25 years.
  • The loan amount is up to 80% of the cost of the property.

Like almost everywhere else in the world, mortgage rates in Dubai can be fixed or adjustable. 

Fixed rates are determined on the basis of the refinancing rate (it is determined by the Central Bank) and include repayment of the debt and interest on the loan. Such a loan cannot be changed throughout the repayment period. If the borrower wants to repay the mortgage ahead of schedule, as a rule, banks charge a fine of about $3000.

An adjustable rate means that interest on the loan is calculated from the remaining amount of debt — each month interest payments will be reduced. However, the adjustable rate can change right at the time of payment — everything depends on the state of the real estate market, inflation and other economic factors. As a rule, the adjustable rate is applied by banks for short-term loans — for a period of up to 5 years. 

Receiving a UAE residence permit for real estate investments

The condition for obtaining a UAE residence permit for the purchase of real estate:

  1. Investment in local real estate of no less than €1 million AED (about $272,000 USD).

Bonuses:

  • Registration of companies takes place remotely (online), it is not necessary to visit the country.
  • Documents can be arranged in 1,5 months.
  • A favorable taxation system
  • Upon expiry of the UAE residence permit, you will be able to renew it.
  • Right of permanent or temporary residence in the UAE.
Share using
Realting uses cookies on Realting.com to analyse usage of the website and to enable content sharing on social media. Cookies may be placed by third parties. By closing this message and continuing to use the site you consent to Learn more
Yes, I agree
You have questions?
You have questions?
Get advice from our managers
_account_m_fio_3
Elena
Khotsko
Phone number
+375293706655
WhatsApp
Yusuf<br> Makka
Yusuf
Makka
Phone number
+375296748420
WhatsApp
Konstantin<br> Dvorak
Konstantin
Dvorak
Realting uses cookies on Realting.com to analyse usage of the website and to enable content sharing on social media. Cookies may be placed by third parties. By closing this message and continuing to use the site you consent to Learn more
Yes, I agree