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How Much Deposit Is Required for a Mortgage in Dubai?

When buying a property in Dubai, one of the most common questions is ‘how much deposit is required for a mortgage?’. After all, saving for a deposit is often the first step toward getting a mortgage and becoming a homeowner, with the mortgage deposit requirements having a big impact on both when you can buy a property and also your budget.

In the UAE, the Central Bank has created regulations for how much deposit you need for a mortgage. For expats, these rules are likely to be a bit different to your home country, so understanding the local rules is crucial.

In this article, we outline the deposit requirements for a mortgage in Dubai, offering guidance for first time buyers, expats and UAE Nationals, considering important factors influencing deposit requirements and the benefits of having a larger deposit.

How Much Deposit Do You Need for a Mortgage?

The deposit requirements for a mortgage in Dubai vary depending on a few factors, such as whether you are an expatriate, UAE National or non-resident, as well as the type of property that you are buying.

In Dubai, the UAE Central Bank has set specific requirements for how much deposit is required for a mortgage. These requirements were introduced to give additional stability to the real estate market, reducing speculation and ensuring that buyers have sufficient equity in the property and do not become overleveraged.

The mortgage deposit requirements are:

Expatriates: If you are an expat looking to purchase a property in Dubai, you will need a minimum of 20% deposit for properties valued under AED 5 million. For properties over AED 5 million, the minimum deposit is 30%.
UAE Nationals: For Emirati citizens, the required deposit is slightly lower. For properties under AED 5 million, the minimum deposit is 15%, while properties valued over AED 5 million will require a 25% deposit.
Non Residents: Whilst non-residents of Dubai can qualify for a mortgage, a much higher deposit of at least 40% of the purchase price is required.

Typical Deposit Requirements by Mortgage Type

Mortgage deposit requirements can also vary depending on the type of mortgage that you choose. In Dubai, there are a number of different mortgages available each with distinct structures and deposit requirements.

Fixed-rate Mortgages: With a fixed-rate mortgage, the interest rate remains the same for a certain period, usually 1-5 years. This is popular with buyers who prefer predictable payments. The deposit requirements for fixed-rate mortgages generally follow the same guidelines of 20-30% for expatriates and 15-25% for UAE Nationals, depending on the property’s value.
Variable-rate Mortgages: The interest rates for variable-rate mortgages fluctuate with changes in the market. This can result in lower interest rates when conditions are favorable, but could also mean higher repayments if market conditions worsen. The deposit requirements for variable-rate mortgages are generally the same as fixed-rate mortgages
Offset Mortgages: If you have cash savings with the same bank as your mortgage, you might be able to get an offset mortgage. This type of mortgage allows you to reduce the amount of interest you pay on the loan, based upon how much you have saved. These mortgages can have higher deposit requirements, often starting at 25-30% of the purchase price.
Investment Property: If you are purchasing an investment property, such as a buy-to-let, the deposit requirement can be higher, often 25-40%. This is because investment properties are seen as higher risk, so lenders require a greater level of security.

Factors Influencing Deposit Requirements

There are several factors which can influence how much deposit is required for a mortgage. Whether you are considering how much deposit you need for a first time buyer mortgage, or an investment property, understanding these factors can help you prepare for the financial commitment of buying a property.

Property Value: The price of the property you're purchasing is a key factor influencing the deposit requirement. As mentioned previously, properties that are priced over AED 5 million have a higher percentage deposit required.
Nationality: Whether you're an expatriate or a UAE national significantly affects the deposit percentage, with expats needing a higher deposit than citizens.
Credit History: Your personal credit history will also impact the amount of deposit you need. Buyers with a good credit history may find they are eligible for more favorable deposit terms, while banks may require those with a bad credit score to have a higher deposit.
Lender Policies: Different banks and lenders may have varying policies on deposit requirements.Comparing mortgage options from different banks, particularly by using an experienced mortgage broker, can help you find the most suitable product and deposit requirements for your situation.

How Much Should You Aim to Save for a Deposit?

When buying a property in Dubai, it's crucial to set a realistic savings goal for your deposit. As a general rule, you should save at least 20% of the property’s value for the mortgage deposit.

Here's a quick guide to the minimum deposit required for expats and UAE Nationals to buy a property, based upon various property prices.

Price	Expat (20%)	National (15%)
AED 1,000,000	AED 200,000	AED 150,000
AED 2,000,000	AED 400,000	AED 300,000
AED 3,000,000	AED 600,000	AED 450,000
AED 4,000,000	AED 800,000	AED 600,000

You should also save for the other costs of buying a property, such as the 4% Dubai Land Department (DLD) registration fee and the agency commission. In total, these costs can total about 6-10% of the purchase price, but there may be the option to include some of these fees within the mortgage, to reduce the upfront cost. Speaking to an experienced mortgage broker can help you explore this option.

Benefits of a Larger Deposit

Whilst it's important to understand how much deposit is required for a mortgage as a minimum, there are a number of potential benefits to saving for a larger mortgage deposit. These include:

Lower Interest Rates: Many lenders offer more competitive interest rates to buyers who provide a larger deposit. This can save you a substantial amount of money over the life of the mortgage.
Increased Equity: By paying a larger deposit, you’ll own a greater share of your property from the outset. This can give you more financial security and a lower risk in the event that property prices decrease.
Smaller Monthly Payments: A larger deposit means you’ll need to borrow less, which in turn reduces your monthly mortgage payments. This can give you greater flexibility in managing your finances.
Higher Loan Approval Chances: A larger deposit demonstrates to lenders that you are financially responsible and less of a risk, potentially improving your chances of mortgage approval.

Conclusion

Understanding how much deposit is required for a mortgage in Dubai is a crucial part of buying a property. For expats, the minimum deposit typically ranges from 20-30%, while UAE Nationals enjoy slightly lower rates of 15-25%. Various factors, such as the type of mortgage, the value of the property, and your credit history, can influence the deposit you need to provide.

By understanding the mortgage deposit requirements, you’ll be well-equipped to navigate Dubai’s thriving real estate market and make informed decisions about buying a property.