How financing a home has transformed itself in Dubai?

How financing a home has transformed itself in Dubai?

Tuesday 01 August 2023Wed 16 Feb
How financing a home has transformed itself in Dubai?

It comes as no surprise Dubai has predominantly transformed into the city of the future within a span of a short few years.

From incredible developments, to breaking numerous world records and becoming the ideal spot for expats to start their lives at, this millionaires playground has transformed in more than just one way.

Access to finance has eased throughout the years, helping almost anyone and everyone to easily get their hands on a mortgage and soon acquiring their dream homes.

But the question still remains, how has access to financing a home transformed in Dubai? Let’s find out…

Financing a home in Dubai has eased through the introduction of mortgages in Dubai, which was introduced in 2008. Ever since a stream of financing options have flown in:

Availability of mortgages

In the past, getting a mortgage wasn’t as easy as it is today. I mean, with Allsopp & Allsopp it's always been easy but getting a mortgage before was relatively challenging.

Although, in the recent years many financing companies and banks have opened up their doors and are more lenient with offering mortgages. Not only has this influenced many new home-buyers to come and invest in Dubai, where mortgage rates are 2.99% lower than the global average of 3.03%. This makes it easy for home-buyers to invest in prime real estate.

Regulatory reforms

Dubai has introduced multiple regulatory reforms for residents and buyers to make the real estate market more investor-friendly.

These reforms are measures to improve transparency during sales, protect buyers' rights, and regulate the mortgage lending practices. Such regulations have got greater confidence in the market and provide a more secure environment for financing property purchases.

Ain’t that great?

Offering more affordability and flexibility

As the market is constantly evolving and growing in demand is on the rise, Dubai has offered buyers more affordable and flexible financing options. This includes a range of mortgage loans from banks with different interest rates, loan options such as monthly instalments, and down payment requirements, allowing buyers to choose options that align with their financial capabilities and goals. Additionally, affordability in the market has become more comprehensive, as Dubai is considering borrowers' income stability and debt-to-income ratios to ensure responsible lending practices and avoid debt.

Bringing in home finance companies

After Dubai announced the introduction of mortgages, apart from banks, private home financing companies also came in offering loans that are specifically tailored to property purchases.

Home financing companies provide many different competitive financing options that have flexible terms, and have also built a streamlined application process, catering to the diverse needs of homebuyers. So, you can get exactly the type of loan you need - suited to your financial capabilities.

Now, isn’t that easy?

Introduction of Islamic financing options

After the success of home financing companies, Dubai announced hosting Islamic financing companies.

As Dubai is an Islamic city, the rise of demand for Islamic financing options is also much higher. So, these Islamic banks offer Sharia-compliant financing alternatives that meet Islamic principles, such as profit-sharing or the purchase and resale of the property at an agreed-upon price. They also have expanded financing choices for those seeking Islamic-compliant options.

Developers offering financing initiatives

Apart from home financing companies, banks and others, developers are now also offering finance to their buyers.

These initiatives may include easier instalment plans, post-handover payment options such as paying a certain percentage before purchase and the remaining after, or flexible payment terms. Developer financing has provided greater accessibility to property ownership, particularly for those who may face challenges in securing traditional bank mortgages.

Developers also provide payment plans over a course of multiple years that help buyers purchase based on their financial capabilities.

Home equity financing

Home equity is a great way to loan and finance homes if you are a previous home-owner or investor.

This loan uses the borrower's equity, which means the property loan is reliant on the current market value of the property - that you plan to use as equity payment. Compared to other loans, with home equity financing you can get lower interest rates, and longer repayment plans. This is incredibly flexible for those looking for easier financing options, although it's important to note that home equity loans are one of the riskier forms of borrowing, as they are secured against your property. It is therefore important to consider the risks associated with this type of loan before deciding to take one out.

Overall, taking a mortgage out in Dubai has become seamless and quite easy relatively. So, if you’ve got any queries, you could get in touch with our in-house mortgage experts on how to move forward with your mortgage.

And if you’ve got investments on your mind - take a look at some of our live listings.

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