How to Get a Mortgage in Dubai

Whether you are looking for a home or an investment opportunity, owning a property in Dubai is an attractive prospect thanks to the presence of high-quality luxury homes and a strong and stable market, both in terms of rental and sales performance. 

Dubai welcomes international property buyers. To make owning a Dubai property a reality, you will need to decide how to finance your purchase. There are three popular options for property finance in Dubai: making a cash payment in full, using a developer’s payment plan to purchase off-plan property, or using a Dubai property mortgage. 

Here’s a comprehensive overview of how UAE property loans work and how to get a mortgage in Dubai.

Buying Property in Dubai

Expats and international investors can buy property in Dubai so long as it is within a designated freehold or leasehold area. These areas are plentiful and attractive options for overseas and expat buyers include properties for sale in Dubailand, Dubai Marina, Barsha Heights, JVC and many others. 

Whether you are looking for a home for yourself or an investment opportunity, you can choose from a range of desirable properties, including villas, penthouses, townhouses or apartments. Properties are available off-plan or as resales that are ready to move into. 

Before you begin your search, you will need to consider how to finance your property purchase. As an overseas passport holder, you may be able to get a Dubai property loan to help finance your purchase, including the option for an off plan mortgage in Dubai. 

Types of Mortgage Available in Dubai

There is a well-established mortgage market in the UAE, with both local and international lenders offering Dubai property loans to eligible borrowers. Many local UAE banks offer mortgages to overseas buyers, although their terms and conditions differ from those they offer to UAE nationals. International banks operating in the UAE also offer Dubai property loans. All are regulated by the Central Bank. 

Most standard mortgage types are available so you can find a property loan in Dubai that suits your situation and needs. You can get mortgages for both existing properties and new off plan projects in Dubai. 

Mortgage products offered by Dubai lenders include:

• Residential mortgages
• Buy-to-let and investor mortgages
• Foreign investor mortgages for non-residents
• Mortgages for commercial properties
• Land and construction mortgages for property development.

Dubai Property Loan Models Explained: Conventional and Islamic

Conventional mortgages are available in Dubai, as well as those using Islamic finance models. 

Standard mortgage models

With a conventional mortgage, the property purchaser borrows the sum needed to make the purchase, and the bank makes a profit by charging the borrower interest on their monthly repayments. 

Both fixed interest rate and variable-rate mortgages that track EIBOR (Emirates Interbank Offered Rate) are available in Dubai. You may also find a mortgage with a reduced interest rate below EIBOR as an short-term introductory offer for first time buyers. 

Islamic mortgage models 

Under Shariah law, paying interest on a loan is forbidden. Therefore, banks using Islamic finance models use alternative ways to profit from the transaction. One example is the Murabaha finance model, when the bank purchases a property on behalf of the customer and then sells it back to that customer through monthly installments that result in an overall profit. 

With Ijarah finance, the bank also makes the property purchase on behalf of the buyer. The  property purchaser then leases the property from the bank and pays rent until the loan is fully repaid. There are further Shariah law compliant mortgage models available, too. 

Eligibility for a Dubai Property Loan

Mortgage requirements in Dubai are simple. You must be at least 21 years of age to obtain a mortgage in Dubai and under 65 years if you are an expat. Most foreign passport holders are able to apply for a mortgage in the UAE but some countries may be sanctioned. The list of sanctioned countries is subject to change and can vary between banks. 

You will also need to provide a history of a stable income, although the exact requirement for this varies from lender to lender. You may need to be in a job at least six months to a year or have run your business for two years if you are self-employed. You will also need to have a good credit rating. 

To be eligible for a Dubai property loan, you must demonstrate that you have the necessary deposit and that you can afford the mortgage repayments. Banks will conduct thorough checks once they receive your application.  

Deposits

You will need a deposit to secure a mortgage in Dubai. As an expat, you will usually need to provide 25% of the purchase price as a deposit before you can secure a mortgage. As an overseas investor, you will typically need a 50% deposit. UAE nationals usually need to provide 20% of the final purchase price.

How to Get a Mortgage in Dubai: The Steps to Take

The steps towards getting a mortgage in Dubai are straightforward as long as you meet the Dubai mortgage rules for eligibility and have your paperwork in order. 

1. The first step is to choose a mortgage provider that offers the right property loan for your requirements and favorable interest rates or repayments. Research all your options, including both UAE and international banks. A mortgage broker can help you with this step.

2. Make an application. You will need to prepare various documents to make your application. These may include:

• Passport
• Emirates ID
• Proof of salary or income
• Proof of your current address
• Bank and credit card statements.

3. Wait for your pre-approval letter while your chosen lender makes the required document and financial checks.

4. Once you have pre-approval on a mortgage loan, you can begin your property search and make the first steps towards purchasing a property. 

5. Pay your deposit on your chosen property and liaise with your mortgage lender on how to finalize the loan and complete the purchase. You will need to provide a security bank check. This is used in case you fail to meet a mortgage repayment. If the security check bounces, the mortgage lender can then begin to take legal action. 

When the mortgage lender releases the full payment to the developer or seller of your property, you become the owner. 

Searching for Your Ideal Property

Now that you are familiar with how to get a mortgage, it’s time to start your search for your ideal property with real estate companies in Dubai. Bonum Realty’s local and professional expertise can provide you with the information you need to locate a dream home or prime investment opportunity. Get in touch today to get started.