If you are planning on living in Dubai for an extended period, you may be better suited to purchasing a home, as opposed to renting long term. Equally, if you are looking for a property for purely investment purposes, there are few global cities in the world that offer as healthy a return on investment through rental yields as Dubai. Whatever your reasons for looking for a property in the city, you need to understand the type of mortgages available, and the steps needed to get one set up. The good news is that this is possible for a foreign resident, and mortgage providers are well equipped to deal with expat and non-resident mortgage applications, whether you are looking for an investment or for a new family home.
As an expat, you can apply for a mortgage in Dubai either for a home you intend to live in, or as an investment property. However, depending on your circumstances, and the specific property you want to buy, the deposit amount you are asked to pay can vary. The first thing you need to decide is whether you want a fixed rate or variable rate product.
Fixed rate mortgages will guarantee the same interest rate will be applied for the duration of the agreement. This is usually in the range of 3 years and may even be availed of for up to 10 years, after which the mortgage will revert to a flat rate set by your bank. Post 2018, Dubai’s mortgage rates have decreased, with the EIBOR Rates currently at an all-time low. This is been largely due to the financial stimulus extended by the government which is contributing towards the development of the country and simultaneously, having a positive impact on investor sentiments. When compared to the same time last year, we currently see fixed rates for as low as 2.21% with zero processing fees (subject to terms and conditions).
Your alternative option is to take a variable rate mortgage. Unlike a fixed rate product, these can cost more, or less, depending on how the interest rates change. They’re a good idea if you think that rates are going to fall within the term of your loan and it should be noted that over the last three years, mortgage rates in Dubai steadily decreased. As we stand today, fixed margins from banks go as low as 1.45% when compared to the same time last year with the rate of 2.99%.
In Dubai it’s also possible to get an interest repayment only mortgage, but the term of this won’t be longer than five years.
We also have special approvals (subject to client profile) where banks are willing to cover the DLD transfer fee of 4% and agency commission of 2%, over and above the approved mortgage percentage.
Different banks and brokers will offer different products, and not every customer can access all of the loans available. You will likely need to take specialist advice to help you understand all the products available to you.
You can choose to have a broker help you process your mortgage facility. There would be some brokerage fees payable from your side (as is the case in any part of the world) but the broker will ensure that they are handling your transaction from A to Z, while source the best option for you.
In some cases, for example, where you are unsure of your eligibility for a mortgage, it might be a good idea to take expert advice from a qualified mortgage broker. This is especially important if you are new to the Dubai mortgage market and not familiar with all the options or regulations.
Getting your mortgage arranged in Dubai should not take more than a couple of weeks. It’s a good idea, though, to get an advance approval from the bank to confirm what you’ll be lent. Then once you find a home you like in your budget, you can finalise the mortgage with ease, and without delays.
The exact paperwork you will need will depend on the bank you use. However, you can expect to be asked for the following:
All over the world, affordability is an important deciding factor in whether or not you’ll be offered a loan. In many countries you must be able to prove that the repayments on the total amount of debts you hold amount to no more than 30% to 35% of your usual income. However, in Dubai the law only requires that your debt payments come to no more than 50% of your income, so many banks are more flexible with this than in other countries.
Depending on the situation you might find that there are other costs associated with arranging the loan. However, the major initial outlay will be the deposit you have to pay to secure the loan and the sale. For example, if you are buying an off-plan property this could be up to 50% of the total cost.
Buying a new home is a big step, and when you’re buying in a new country, it can be a daunting process.
Many expats have put down roots in Dubai, by buying a family home or investment property. As a result, the local financial services sector is experienced in dealing with foreigners, and as long as you’re in an appropriate financial position, you should be able to easily get a mortgage that suits you as an expat buyer.
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Georges joined Select Group as Commercial Director in 2020. He has over 18 years’ experience in destination management and expert knowledge across an array of industries including hospitality, tourism and MICE. He has a deep understanding of the GCC, and the buying behavior of the international visitors to the region.
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