As more and more people from around the world (and UAE) choose to make Dubai their home, the time is ripe for you to make an investment too. But before you start looking for your dream property, you need to understand how mortgages work in the UAE.
The United Arab Emirates is a federation of seven emirates. It is situated in the southeast of the Arabian peninsula, bordering Oman, and the Persian Gulf. The capital city is Abu Dhabi, followed by Dubai and then Sharjah. Each emirate has its own government but they are all ruled by a single monarch.
The real estate market, especially in Dubai, has been growing for many years, with property prices reflecting the high demand and a building boom that has seen the city earn its reputation as the world’s most innovative city.
Scholars have suggested that there are a number of reasons why people choose to invest in Dubai, including the fact that it is close to Europe and Asia, and is simply an international hub for business.
Dubai was recently voted as having the best quality of life in the Middle East. High salaries and job security make Dubai attractive to investors.
The rental market is also booming with limited availability of property and high demand driving this trend.
Mortgages in Dubai
The mortgage market in Dubai is well-established, thanks in part to the economic boom that the emirate has seen over the last few years. Mortgages, just like in the UK, allow you to buy your property with a loan from a financial institution. As long as you meet all of the eligibility criteria and have enough funds available to make your monthly repayments, then you should not face any problems obtaining a mortgage here.
In most cases, you will need a deposit of between 20% and 50% of the property’s value; however, large deposits may be required for more expensive properties.
It is also essential that you have a steady source of income, particularly if you are a first-time buyer. Banks and mortgage providers will also want to see evidence of a regular and stable income stream. This could be in the form of an employer’s reference, pay slips, or bank statements.
If you are buying for investment purposes, then you will have to be able to demonstrate that you have money coming in from rental income.
There is finance available for both new and previously owned property; the latter is known as second-hand mortgages in Dubai. The type of mortgage that it is depends upon a large number of factors including whether or not the property can be sold easily, the location, and if there are any outstanding loans against it.
The Cost of Purchasing a Property in Dubai
While the cost of property in Dubai may be relatively low (compared to some other parts of the world), it is important to remember that the cost of living in this area is high, so the average price of a home will typically be around 100,000 Dirhams.
There are many different types of mortgages available in Dubai, and you should speak to your lender when you are looking for one. It is also important that you keep an eye on monthly interest rates – there are no fees or charges for paying them off early; however, you might also face higher fees if you don’t make your payment on time.
Who can get a Mortgage in Dubai?
The Eligibility Criteria for a Mortgage in Dubai are broadly simple.
Foreign purchasers can obtain a mortgage in the UAE, but they must meet specific requirements. You must have been in your present job for at least six months or a year, depending on the location you are purchasing in and the rules of your lender.
Borrowers who are self-employed must have been in business for at least two years. It can also help to have an established relationship with the bank because it will be familiar with your situation.
It is important to have a clear credit history. However, in Dubai, it is possible to get a mortgage as long as you have good employment history and paid your bills on time. It is also helpful if you have a deposit before applying for the mortgage, although this isn’t always necessary.
These days, banks are keen to lend money; they are not afraid of risk, so they will normally approve mortgages if they like the borrower’s creditworthiness and ability to repay the loan.
Types of Mortgages
Mortgages in the UAE are available with either a fixed or variable interest rate. Fixed terms are typically five years long, although they can be as short as one year.
Fixed-rate mortgages provide you certainty about the size of your repayments for a defined period of time, but variable-rate mortgages are worth considering if interest rates are expected to fall. Terms are typically set at 25 years, and the loan must be returned before the age of 70.
While it is possible to get a mortgage in Dubai, it is still a good idea to consider your financial situation before making any final decisions. Getting a mortgage in the UAE can be quite complicated, especially if you don’t have much experience in this area. As with many other types of loans, you will most likely be asked to provide evidence of your employment status and income.
A mortgage is one of the best ways to buy a property (especially if you are buying it for investment purposes). It allows you to accumulate equity over time while paying off your home gradually.
If purchasing property is on your list of things to do within the near future, then take some time out with us to explore the options available and decide which type of mortgage would benefit you the most.