Buying a home in the UAE is no less than a dream come true. However, it is challenging for expats to pay the full amount upfront when purchasing a home. What if we tell you a smart option? With a mortgage or home loan in the UAE, fulfilling your dream is possible.
If you want to experience a vibrant lifestyle where every day is enjoyable, buy a home in the Emirates. Scroll down to learn about home loans, from types and eligibility to process and top banks.
- Understanding Home Loans in the UAE
- Conditions for Home Loans
- Types of Property Mortgages
- Home Loans Eligibility Criteria for Expats
- How to Apply for a Home Loan as an Expat
- Banks to Apply for Home Loans
- Understanding Mortgage Refinancing
- Benefits of Home Loans
- FAQs
Understanding Home Loans in the UAE
Home financing or mortgage is a popular option for buying a property in the UAE. An authorised lender such as a financial institution (bank) offers property loans. Depending on the type of mortgage, the borrower pays an interest rate for a pre-decided duration.
Now, one of the most asked questions here is, ‘Can expats get a mortgage in the UAE’? The answer to this question is, yes. Expats can apply for a property mortgage, subject to certain conditions discussed ahead.
Conditions for Home Loans
Did you know expats can get a maximum 80% loan-to-value ratio (LTV)? Here are some conditions regulating home loans in the UAE:
- Loan Amount: Expats can borrow a maximum of AED 25 million. The loan amount depends on monthly earnings and the bank.
- Down Payment: Expats usually have to pay 20% to 30% as a down payment. This depends on the property value.
- If the property value is above AED 5 million, the down payment must be 30%.
- If the property is below or equal to AED 5 million, the down payment is 20%.
- LTV Ratio: The loan-to-value ratio highlights how much an individual can borrow depending on a property’s value. The LTV ratio is set to a maximum of 80% for expats. This means if an expat buys a property in Dubai at a value of AED 4 million, the maximum loan amount can be AED 3.2 million. For off-plan mortgages, the LTV value is set to 50%.
- Interest Rates: Interest rates are set as per the current EIBOR rates and can be fixed and variable.
Types of Property Mortgages
Choosing the right mortgage type is key to easily paying off instalments. Here are the types of home loans in the UAE:
1. Fixed Rate Mortgage
As the name suggests, this mortgage type involves fixed interest rates set before the agreement. The best part is that the interest rates remain fixed throughout the loan term. It is perfect for those looking for a long-term option as the interest rates are independent of inflation.
For instance, you apply for a home loan to buy an off-plan property in the UAE. The loan is approved at a fixed interest rate of 3% for 9 years. In this case, the interest rate will remain the same for 9 years.
2. Variable Rate Mortgage
As opposed to fixed rates, this option offers variable interest rates. The interest rate varies depending on inflation and the Emirates Interbank Offered Rate (EIBOR). This lowers the interest payments or raises the amount depending on inflation.
It is suitable for those who can afford sudden fluctuations. For example, the interest rate can change depending on inflation if you buy a property in Dubai’s ‘Tiger Sky Tower’ on a variable mortgage.
3. Other Types
Remortgage and offset mortgages are also other types of mortgages in the UAE. They come with a specific set of conditions and purposes.
Home Loans Eligibility Criteria for Expats
Both salaried and self-employed expats can apply for a mortgage in the Emirates. Criteria may differ slightly by bank, however, here are some common points:
- Salaried individuals must be employed in their current company for at least 6 months.
- Self-employed individuals such as business owners must have a clean credit history.
- Borrowers must be a UAE resident.
- Aged should be between 21 and 65.
- A minimum monthly income of AED 15,000. However, some banks also approve loans at an income of AED 10,000 per month.
How to Apply for a Home Loan as an Expat
Applying for a home loan in the UAE is a smooth process. Each bank almost follows the same documentation and process. Here is the process to apply for a property loan:
Required Documentation
Here is the list of must-have documents to apply for a home loan in the UAE:
- Emirates ID
- Copy of valid passport
- For salaried individuals:
- Salary certificate
- Last six months’ bank statement
- Pay slips of the last six months (if there is a fluctuation in pay by more than 10%)
- For business owners/self-employed people:
- Trade licence copy
- Last six months’ bank statement
- Memorandum of Association (MOA) with all amendments
- Audited Company financial reports for the last two years
- For co-borrowers:
- Emirates ID
- Copy of passport
- Last six months’ bank statement and pay slips for salary fluctuations by more than 10% (if applicable)
- Income certificate (if applicable)
- MOA and trade licence (if the co-borrower is also a company owner)
The Process to Apply for a Home Loan in the UAE
If you have decided to buy a home but are short on cash, borrow amount by following these simple steps:
- Search for a property tailored to your needs. Consider down payment, instalments, locality and facilities. If you want to purchase a house in Dubai, we have a separate step-by-step guide.
- Once the property is finalised, see how much loan you can avail. To get a comprehensive overview of the loan amount, try the Mortgage Calculator.
- Before signing the sales agreement, compare different banks and their loan offerings.
- Apply for a mortgage at your chosen bank with the required documents.
- After proper evaluation, the bank will issue a loan acceptance offer with a loan period and interest rate.
- Sign the loan agreement.
- After this, sign the sales and purchase agreement. Pay the down payment and start with monthly instalments.
Note: Requirements may vary by bank, therefore, contact the desired bank for complete details.
Banks to Apply for Home Loans
The UAE has some top banks offering mortgages for expats. Here is the list of some banks to consider:
- HSBC
- Emirates NBD
- Mashreq Bank
- Standard Chartered
- The United Arab Bank (UAB)
- First Abu Dhabi Bank (FAB)
- Emirates Islamic
Moreover, to streamline this process, you can fill out the form on Mortgage Finder. The experts will help you find the perfect home lender from 20+ lenders including UAE’s top banks.
Understanding Mortgage Refinancing
Mortgage refinancing refers to the process of switching to another bank. This is acceptable for expats in the UAE. If a bank has a more suitable offer, you can refinance the home loan by contacting your bank.
Benefits of Home Loans
We have discussed the process and eligibility, but do you know the benefits home loans offer? Let’s have a look at these:
1. Building an Asset
A property in the UAE is an asset in the long run. Purchase one today and see how its value skyrockets over a few years. With a high rental yield, home loans pave the way for you to become an asset owner.
If you want to know a project’s gross rental yield, explore Data Guru. Select the emirate and the project and you are all set to view the return on investment.
2. Buying a Dream Home
With home loans in the UAE, owning your picture-perfect home is a few steps away. Additionally, explore the freehold areas where expats can buy a property:
3. Flexibility
Home loans are extremely beneficial because of flexible interest rates, monthly payments and repayment durations. A loan repayment tenure of up to 25 years also offers flexibility.
FAQs
Expats and nationals are eligible for a home loan in the UAE. However, expats must be residents of the Emirates.
Yes, land financing is allowed in the UAE. This type of financing includes both land buying and construction.
Expats can buy property with a home loan in the UAE. Explore these top flats and apartments for sale in the UAE and buy the house of your dreams. A comfortable and luxurious lifestyle is calling!
Furthermore, explore the top off-plan projects in the UAE on Property Finder.
