How to Get a Mortgage in Dubai: A Beginner’s Guide

Can You Get a Mortgage in Dubai?

Whilst the process of how to get a mortgage in Dubai is generally not that complicated, there are certain criteria that have to be met to qualify for one. Whilst foreigners can apply for a Dubai property mortgage, they will usually have to meet criteria such as having worked in their current job for at least 6-12 months (depending on the lender’s rules) and meet a certain minimum earnings threshold. 

Self-employed individuals normally have to show evidence of running their business for at least two years and provide accounts and tax returns. If they have established a preexisting relationship with their bank, getting a mortgage in Dubai may be easier as the bank is familiar with their circumstances. 

It is important to note that whilst mortgages are widely available in Dubai, the exact criteria and process of how you qualify for a mortgage loan may be subjective from bank to bank. This makes speaking to a qualified mortgage broker, who takes the time to understand your specific circumstances particularly important. 

Eligibility Criteria to Get a Mortgage in Dubai

A crucial part of knowing how to get a mortgage in Dubai, whether it's for an apartment, townhouse or villa, is understanding the eligibility criteria. Whilst some banks may have slightly different requirements, there are usually standard criteria for how you qualify for a mortgage loan in Dubai. 

The most common eligibility criteria for getting a mortgage in Dubai are: 

• A UAE National or Resident 

• Aged between 21 and 65 

• A monthly income of: 

  • At least AED 15K (salaried) 

  • At least AED 25K (self-employed) 

The minimum salary requirement for a property loan in Dubai may also vary per bank. Certain banks may grant a mortgage based upon a monthly income of as little as AED 10K, particularly for UAE Nationals, but this is uncommon. 

Non-residents can also be eligible for mortgages in Dubai, but will have more limited options as there are fewer banks that grant mortgages for non-resident investors, and the required deposit will be higher. 

Types of Mortgages Available in Dubai

When considering how to get a mortgage in Dubai, it's important to understand the different types of mortgages that are available. The variety of mortgage options on offer can provide flexibility depending on your long-term goals and financial situation. 

Here are the main types of mortgages available in Dubai. 

Fixed-Rate Mortgage

 A fixed rate mortgage offers a consistent interest rate for a set period, typically ranging from one to five years. This option provides stability, as your monthly repayments will remain the same throughout the fixed term, allowing for easier budgeting. It’s ideal for those who prefer predictable payments without the risk of fluctuating interest rates.

Variable-Rate Mortgage

A variable-rate mortgage, also known as an adjustable-rate mortgage, has an interest rate that can change periodically based on market conditions. This option is suitable for buyers who are comfortable with some fluctuations in interest rate and may benefit from lower payments if interest rates drop.

Discounted Rate Mortgage

A discounted rate mortgage offers a lower interest rate than the bank’s standard variable rate for a specific introductory period. This could provide significant savings in the initial years of the loan, but it’s important to note that once the discount period ends, the interest rate will revert to the bank’s standard rate. 

Offset Mortgage

An offset mortgage links your savings account to your mortgage. The savings you hold with the same lender are used to reduce the amount of interest you pay on your mortgage.

 For example, if you have AED 100,000 in savings and a mortgage balance of AED 1 million, you would only pay interest on AED 900,000. This is a great option for individuals with large savings who want to reduce their interest costs.

Interest-Only Mortgage

With an interest-only mortgage, you only pay the interest on the loan for a specified period, typically between three to five years. After this period, your repayments will switch to include both the interest and the loan’s principal. This type of mortgage can offer lower initial payments, but it’s essential to plan for higher repayments later or have a strategy for repaying the principal.

How to Get a Mortgage in Dubai: Step-by-Step Guide

There are 7 key steps to getting a mortgage in Dubai, these are: 

1. Prepare your documents

2. Research and find a lender

3. Get pre-approved 

4. Start your property search

5. Make an offer and negotiate

6. Choose your mortgage product

7. Submit your mortgage application

8. Complete the legalities

1. Prepare Your Documents

Start by preparing all the necessary documents like proof of income, bank statements, your passport, and residency visa. This ensures you’re ready to proceed smoothly without delays.

2. Research And Find A Lender

When getting a Dubai property mortgage, you can either approach a bank directly for a mortgage in Dubai, or you can speak to a mortgage broker. A mortgage broker will find the most suitable mortgage provider and product for you.  

3. Get Pre-Approved 

Obtaining a pre-approval letter is one of the most important steps to getting a mortgage in Dubai. This is an official document issued by a bank that confirms that you can get a mortgage in Dubai . It provides an evaluation of your finances and outlines the maximum amount that you can borrow for your mortgage. 

This not only helps you to understand your budget, but also shows sellers that you are serious, strengthening your negotiating position. 

4. Start Your Property Search

With pre-approval in place, you can work with a real estate professional to find a property that fits your budget and meets your requirements. 

5. Make An Offer And Negotiate

Once you’ve found a property, your real estate agent can make an offer and negotiate on your behalf. This step is crucial to ensuring the final price is aligned with your pre-approved amount. 

6. Finalize Your Mortgage Choice

It's time to finalize your choice of mortgage. With multiple types of mortgage to choose from, like fixed rate, variable rate and interest-only, as well as other factors like the length of mortgage, consulting a mortgage specialist is recommended to ensure you make the right decision. 

7. Submit Your Mortgage Application

After choosing a property and a mortgage, you can formally apply for the mortgage by submitting the required documents to your chosen lender. You can either do this directly, or if working with a mortgage broker, they will do it on your behalf. 

8. Complete The Legalities 

Sign the Sales and Purchase Agreement (SPA) and complete the necessary steps as advised by your real estate agent and bank/mortgage advisor to complete the property purchase and transfer process. 

What Documents Are Required to Get a Mortgage in Dubai?

The exact documents that you will need to qualify for a mortgage loan may vary slightly depending on your individual circumstances and your chosen bank. 

But, the following documents are typically required by any bank for a property mortgage:

• Passport and visa copies

• Emirates ID copy 

• Salary certificate as proof of employment

• Payslips and bank statements for last 6 months

• Credit card statements

• Proof of your current address, such as copy of DEWA bill or tenancy agreement

Understanding Mortgage Terms and Conditions

When getting a Dubai property mortgage, it's crucial that you are familiar with certain aspects of the loan you choose. Here are some important mortgage terms and conditions to understand. 

Interest Rates

Your mortgage interest rate determines how much you'll pay on top of the principal loan. Fixed rates offer stability with consistent payments, while variable rates fluctuate based on market conditions, potentially increasing or lowering your monthly costs.

Loan Tenure

The loan tenure, or period, refers to the length of time that you will have to repay the mortgage. Most mortgages in Dubai range from 15 years to 25 years in length. A longer mortgage tenure will mean lower monthly payments, but you will pay more in interest over the length of the loan. This means you should weigh up the balance between having manageable monthly payments and reducing your overall cost. 

Early Repayment Penalties

When getting a mortgage in Dubai, you should confirm whether there would be any fees if you decide to repay your mortgage early. Many lenders restrict by how much you can overpay your mortgage, and may charge a fee of around 1-3% of the outstanding loan amount if you pay the mortgage off early, to compensate for the lost interest. 

Loan-to-Value Ratio (LTV)

The loan-to-value ratio of a mortgage is the percentage of the property’s value that the bank is willing to finance. In Dubai, the loan-to-value ratio is typically about 75%-80%, meaning you’ll need to have at least 20-25% saved as a down payment. 

Debt Burden Ratio (DBR)

Debt burden ratio is the percentage of your total monthly income that goes towards debt repayments. Regulations in Dubai require your debt burden ratio to be no more than 50%, meaning total debt repayments, including loans, your mortgage etc, do not exceed half of your monthly income. Lenders will assess this ratio to determine how much you can borrow. 

Mortgage Costs in Dubai

When understanding how to get a mortgage in Dubai, another important aspect is understanding the costs involved, in addition to the interest payments. Below are some key mortgage costs in Dubai to consider. 

Down Payment

The down payment is the initial deposit that you will need to pay when buying a property. For expats, the minimum down payment is usually 20-25% of the purchase price, but UAE Nationals may be able to secure a mortgage with a lower down payment.

Bank Processing Fees

Most banks charge a processing or arrangement fee when you apply for a mortgage, typically around 0.5-1% of the total loan amount. These fees are usually non-refundable and are added to your initial costs when securing a mortgage.

Property Valuation Fees

Before approving your mortgage, the bank will require a valuation of the property to ensure its value is in line with the loan. This usually costs about AED 2,500 to AED 3,500 and is conducted by a third party valuer. 

Mortgage Insurance

Your lender may require you to have mortgage protection insurance, which covers the outstanding loan balance in the event of death or critical illness. The cost of this insurance depends on the loan amount and the lender's requirements, and is either paid upfront or added to your monthly repayments.

Property Transfer Costs

There are various additional costs of buying a property in Dubai which you need to factor in. These include a transfer fee to the Dubai Land Department (DLD) of 4% of the purchase price, as well as an agency fee to your real estate broker of 2%. 

Admin Fees

Some banks charge additional admin fees for the mortgage. These fees cover paperwork, administration, and processing costs related to the mortgage.

Conclusion

Getting a Dubai property mortgage does not have to be a stressful experience. By understanding the process of how to get a mortgage in Dubai, ensuring that you meet the eligibility criteria, and working with an accredited mortgage broker and real estate agent will allow you to confidently navigate the process of buying a property using a mortgage. 

Taking the time to prepare your documents, get pre-approved, and understand all associated costs will contribute to a smooth and efficient property-buying experience. Whether you are a first-time buyer or an experienced investor, having the right support and knowledge is key to making informed decisions.