How to Get A Home Loan in Dubai

Buying a home in the lucrative economy of Dubai is one of the wisest decisions of anyone’s life. However, interesting as it may sound, it cannot be done overnight. It requires months or sometimes years of planning. After all, you are going to invest your hard-earned money. In Dubai, you can buy a residential property in two ways. You can buy either through cash or by securing a home loan. While a cash transaction may offer cost advantages, securing a home loan in Dubai provides flexibility in financial management. If you are planning to buy a property in Dubai you may wonder how to get a home loan in Dubai. We, at XPLOON, are always focused on making your home buying journey easy. So, here in this guide, we are highlighting all the essential elements of getting a home loan or mortgaging a property in Dubai. 

Who is Eligible for Getting a Home Loan in Dubai?

Before diving into the details of the process of getting a home loan in Dubai, let’s first know the eligibility criteria for securing a home loan in Dubai. Whether your interest lies in an apartment, villa, or townhouse, meeting certain criteria allows for quicker approval of a home loan in Dubai. You can mortgage a property in Dubai if:

• You are a UAE national or resident
• You are aged between 21 and 65
• Your minimum monthly income is AED 15,000 if you are a salaried individual or AED 25,000 if you are self-employed.
• You are a non-resident and you meet specific eligibility criteria

It's important to note that minimum salary requirements can vary across banks. 

FAQ: Can non-residents get a home loan in Dubai? 

Non-residents are eligible for a home loan in Dubai, but options are very limited. There are only a few banks that allow non-residents to apply for a home loan in Dubai. So, if you are residing in a different country and planning to buy a property in Dubai, it is advisable to do thorough research about financing options available in Dubai. Moreover, if you are going to invest in an off-plan property, it is also important to note that some banks have a list of approved property developers. So, before choosing a bank, make sure that your property developer is on the approved list of that particular bank.   

Process of Getting a Home Loan in Dubai 

1. Arranging Necessary Documents 

Applying for a mortgage necessitates the submission of specific documents, although requirements may slightly differ among banks. Essential documents include:

• Visa and passport copies
• Emirates ID copy
• Salary certificate for employment verification
• Proof of residence (tenancy contract or DEWA bill)
• Pay slips and bank statements spanning the last six months

For Non-Residents 

Non-residents require a simpler set of documents, typically involving passport copies and bank statements from the previous three months.

2. Selecting A Bank

If you are a UAE national or expatriate resident, you have wider options for securing a home loan in Dubai. However, if you are a non-resident, your options become limited, as mentioned above. Whatever your status is, it is important to approach banks directly or conduct online research to navigate available mortgage options efficiently.

3. Choosing the Type of Home Loan

Are there actually any types of home loans in Dubai?

Yes, there are various types of home loans in Dubai. However, the two major types are fixed-rate home loan and variable-rate home loan In Dubai:

Fixed-Rate Home Loan: As the name suggests, fixed-rate home loan is a home loan with a consistent interest rate for the entire repayment period, ensuring predictable monthly payments.

Variable-Rate Home Loan: A variable-rate home loan is a home loan with an interest rate that can fluctuate based on market conditions, potentially leading to varying monthly payments over time.

So, which home loan is best for you?

This depends upon factors such as property type, required loan amount, cash deposit capability, income, and risk tolerance. Fixed-rate mortgages usually cost you a higher amount but offer stability, while variable-rate mortgages may offer initial savings but carry interest rate fluctuation risks.

4. Obtaining A Pre-Approval Letter

This crucial step provides evidence of eligibility for housing finance. The pre-approval letter is issued by the bank specifying the maximum borrowing limit and offering certainty in securing a home loan in Dubai.

FAQ: What is the home loan borrowing limit in Dubai?

Ready Property 

For a ready property, the maximum loan-to-value (LTV) ratio in the UAE is 85% for UAE nationals and 80% for expat residents. However, the percentage varies from bank to bank and other eligibility factors. 

Off-Plan property  

There is a very limited number of banks that provide a loan for an off-plan home, that too for projects by renowned developers only. Moreover, the maximum LTV is 50% of the property value, when the construction is complete. That means you can only be eligible for mortgaging your property if a) you have sufficient funds to pay the first 50% or more amount and b) you are buying from one of the developers approved by the bank. To avoid any issues in the future, you should gather enough knowledge about the banks that provide a loan against an off-plan property and the approved developers.

5. Finding A Home

Now that you are certain about the maximum amount you can borrow, Utilize the pre-approval period (typically 60 to 90 days) to explore properties within your budget.

6. Finalizing the Property Purchase

The final step in the process of getting a home loan in Dubai is to collaborate with your chosen bank to finalize the loan agreement, assess property value, negotiate with the seller, pay the deposit, and complete the purchase transaction.

Navigating the process of obtaining a home loan in Dubai is just the beginning; familiarity with other legal aspects and associated costs is advisable for a seamless property purchase experience. Non-resident buyers should also acquaint themselves with the UAE's regulations on foreign property ownership to mitigate potential complications.