Hello, this is Arty. I often get questions from my clients abroad about getting a mortgage in the UAE. They wonder if it's possible and if they qualify.
In a nutshell: Yes, you can definitely get a mortgage in the UAE by applying for a home loan from one of the local banks. I'm willing to bet that the whole process isn't any more complicated than what you'd experience in your home country.
However, it's a smart move to reach out to mortgage brokers. They're there to help and can guide you through all the details. Some of them even work without charging you a commission since they are covered by the banks.
In this article, I'm lifting the veil on the basics of the UAE mortgage market for clients who want to understand the ropes.
Just a heads up: All the numbers and data in this article are for explanatory and informational purposes only. I'm not a blogger or a mortgage broker, so I won't be updating this article every time there's a change in bank regulations or rates. If you're okay with that, let's keep going.
In a nutshell: Yes, you can definitely get a mortgage in the UAE by applying for a home loan from one of the local banks. I'm willing to bet that the whole process isn't any more complicated than what you'd experience in your home country.
However, it's a smart move to reach out to mortgage brokers. They're there to help and can guide you through all the details. Some of them even work without charging you a commission since they are covered by the banks.
In this article, I'm lifting the veil on the basics of the UAE mortgage market for clients who want to understand the ropes.
Just a heads up: All the numbers and data in this article are for explanatory and informational purposes only. I'm not a blogger or a mortgage broker, so I won't be updating this article every time there's a change in bank regulations or rates. If you're okay with that, let's keep going.
Important Information for Residents
Greetings, residents! If you're considering a mortgage in the UAE, here are some key details you should be aware of:
- A mandatory 20% down payment is required, and taking a personal loan is not an option.
- To be eligible, the minimum monthly salary is AED10,000, although more banks are open to applicants with a salary over AED15,000.
- The maximum tenor of a mortgage is 25 years, up to the retirement age (65 for salaried and 70 for self-employed).
- For those employed, the minimum length of service at the current employer is 6 months.
- If you're self-employed, a minimum business duration of 6 months is required (for a 60% loan and 40% down payment).
- It's essential to keep every liability in the UAE as low as possible since every financial commitment, including credit cards, personal loans, and auto loans, has an impact.
- If you've taken a personal loan in the last 6 months, be aware that it may affect your mortgage application.
Now, you might be thinking, "I'm a non-resident! Why should I read this? Give me info for non-residents."
Hold on, the information for non-residents is just below. Understanding the conditions for both residents and non-residents will help you make informed decisions. Even if you're currently a non-resident, acquiring UAE residency later is an option. When that time comes, feel free to refer back to this article for guidance.
Crucial Information for NON-Residents
Hey there, non-residents! If you're eyeing a mortgage in the UAE, here are a couple of options tailored to your profile:
For a 50% Mortgage: The key requirement here is to maintain a minimum balance of AED 25,000 on your personal bank statements every day over the past 3 months. No fuss about minimum income or tenure at your current job. The rate is 7.5% or higher.
For a 60% Mortgage: To qualify for this, you should have an average daily balance of around AED50,000 in your personal bank statements for the last 6 months. The catch? You'll enjoy a fixed rate of 5.5% for the first 3 years.
Of course, there are other factors at play, but nailing those balance requirements is non-negotiable.
Now, you might be thinking, "Wow, the mortgage rate for non-residents is on the higher side." Still interested? Great! I'll delve into why and when applying for it makes sense, and I'll also explore alternative options to the classic mortgage. Stick around and read till the end of the article for the full scoop.
Final Thoughts
Let's cut to the chase and get real about mortgages. I'll share my personal take on when it's a great tool:
- Urgent Move to the UAE: If you're in a hurry to settle in the UAE, tired of rental apartments, familiar with the neighborhoods, and know exactly what property you want, diving into a mortgage might just be the right move.
- Building a Passive Income Stream: If your budget is a hefty USD500k or more, you can consider taking out a mortgage. Buy an apartment, rent it out short-term, let the rental income cover the mortgage, and still have some dirhams left in your pocket. You could be looking at a solid 10-20% return on your invested amount after all expenses and mortgage payments. It's a mid-term strategy, spanning 3-4 years. Curious why? Shoot me a private message.
Sure, the high mortgage rates aren't the only thing to consider. The property might need a bit of a facelift (add that to your costs), and the building's amenities (pool, gym) might be a bit worn out (not much you can do about that!).
But here's the kicker when it comes to buying a ready apartment in the secondary market in Dubai - high transaction and time costs.
Navigating the Secondary Property Market: A Quick Guide
Let me break down how deals in the secondary market work:
Firstly: It's advisable to consider purchasing a property valued at AED 750k (USD 205k). This makes you eligible for an investor's residence visa.
Secondly: To determine the exact expenses you need to tack onto the price, here's the breakdown:
- AED 5,250 registration fee at the trustee office
- 4% land fee (the only tax you'll encounter regarding your property in Dubai)
- 2% agency fee
- 1.5% money transfer fee (you can't directly pay the seller if they are an individual, not a developer, for safety reasons. Instead, you pay a licensed company to handle the transaction. They issue a manager's cheque for the seller, which you (or your Power of Attorney) hand over at the trustee office during the ownership transfer. It's the safest route.)
- OR if you have cash, we can legally bring it in and pay the seller in cash - this sidesteps the 1.5% fee. However, not all sellers are comfortable with cash transactions.
So, you can see, it's a bit tricky.
Exploring Off-Plan Property as a Mortgage Alternative
Looking for an alternative to mortgages? Enter the world of off-plan properties, where construction is underway.
▪️ Brand New Properties: Off-plan means you get spanking new properties.
▪️ Remote Deals: Seal the deal from anywhere.
▪️ 0% Interest Payment Plans: Developers often throw in 0% interest payment plans.
▪️ Post-Handover Payment Plans: Some developers let you pay part of the amount upfront (say, 50%) and settle the rest over 2-4 years post-completion.
▪️ Capital Appreciation: Off-plan properties see a yearly capital appreciation of 10% or more during construction in the current market.
▪️ Amenities Galore: Enjoy better amenities - pools, gyms, and sometimes even cinemas, tennis courts, billiards, you name it.
▪️ No Agency Fee: Developers take care of the agency commission from their marketing budgets.
▪️ No Mortgage Needed: Say goodbye to mortgage woes. But! You still can use mortgage for the last installment (which is 30-50% of the total property price).
▪️ Escrow System: Your money goes into the developer's escrow account, blocked by the government until the project is complete. The developer can't touch it beforehand.
▪️ Safety Measures: Developers deposit 20-40% of project cost into the escrow account as proof of financial stability. A portion remains blocked for a year post-completion for potential fixes.
▪️ Construction Delays: The main risk? Slight construction delays. However, this has become rare since the introduction of escrow accounts 16 years ago.
Red pill or blue pill: which do you choose?
Mortgage or 0% installment plan from developers?
Shoot me a text on WhatsApp +971543884332 to dive deeper.
Cheers,
Arty Zhdankoff
Your Property Advisor
Committed to Your Returns
Mortgage or 0% installment plan from developers?
Shoot me a text on WhatsApp +971543884332 to dive deeper.
Cheers,
Arty Zhdankoff
Your Property Advisor
Committed to Your Returns
