Summary of the Mortgage Process in Dubai
1. Understanding Mortgage Eligibility In Dubai, mortgage eligibility is determined by several factors, such as your residency status, income, employment history, and credit score. Both residents and non-residents can apply for a mortgage, though the terms and conditions may vary. For residents, banks typically require proof of income, employment stability, and other financial documentation. Non-residents may face stricter loan-to-value (LTV) ratios and interest rates. It’s essential to get pre-approval to understand how much you can borrow.
2. Loan-to-Value (LTV) Ratios LTV refers to the percentage of the property value that a bank is willing to finance. For first-time home buyers, the LTV is up to 80% for properties valued under AED 5 million, and 70% for properties above that threshold. For non-residents, the LTV is typically capped at 50-60%. LTV also impacts your down payment, meaning you’ll need to cover the remaining percentage in cash upfront.
3. Mortgage Types and Interest Rates There are two main types of mortgage rates in Dubai: fixed and variable. A fixed-rate mortgage means your interest rate stays constant for a set period, usually between 1 to 5 years. Variable rates fluctuate based on the Emirates Interbank Offered Rate (EIBOR). Fixed-rate mortgages provide predictability, while variable rates might offer lower initial costs but can increase with market conditions.
4. Property Valuation and Mortgage Approval After pre-approval, you’ll need to secure a property. Once a purchase agreement is signed, the bank will conduct a property valuation. The valuation process ensures that the property value matches the mortgage amount requested. Based on this, the final mortgage approval is given. This step usually takes around 5-7 working days but can vary.
5. Mortgage Registration and Final Steps Once the mortgage is approved, both buyer and seller sign a final contract. You will also need to pay for mortgage registration, which is 0.25% of the loan amount, along with a Dubai Land Department (DLD) registration fee. The final step is transferring ownership, which requires a visit to the DLD office, completing paperwork, and securing the keys to your new property.
If you have further questions, please reach out to us. We work with an external consultant, who will be able to help you secure your mortgage.
