Mortgagers: Your guide to first-time Mortgages in Dubai

We know that Dubai is the gem everyone’s eyes are on, but for those who have taken the plunge and made your way here, did you know you could own a home by paying rent? Yup, it's called a mortgage, and here’s your guide to navigating through mortgages in Dubai!

What is a Mortgage?

A mortgage is a financial product that allows you to purchase a property by borrowing money from a lender, which is secured against the value of your home until you repay the loan in full. The amount you can borrow is determined by the property's value, known as the loan-to-value ratio (LTV).

What types of mortgages can you choose from?

There’s two types, fixed and variable.

Fixed Rate Mortgage

With a fixed-rate mortgage, the interest rate you pay remains unchanged for a set period, typically between one and five years, after which you will transition to a reversion rate which is the interest rate that your mortgage 'reverts' to after your fixed rate mortgage period comes to an end

Variable Mortgage

A variable-rate mortgage is subject to fluctuations in interest rates, which can either rise or fall. The EIBOR (Emirates Interbank Offered Rate), which represents the rate at which banks lend to one another, come together with a fixed percentage determined by your lender, that will determine the interest rate you pay.

How can you avail the best mortgage rate as a first-time buyer?

The most favorable mortgage rates for first-time buyers are contingent on various factors, such as property value, the amount borrowed or your deposit, your employment status and income, spending patterns, credit history, and any outstanding debts.

What other factors are to be kept in mind?

Typically, most lenders require a minimum of six months of job stability, while self-employed individuals must have been in business for at least two years.

Loan terms also have an age limit of 65 for salaried applicants and 70 for self-employed individuals.

Official documentation such as passport copies, proof of residency, and financial statements are necessary to complete the mortgage application process.

Additionally, early repayment of the mortgage is an option but involves an early settlement fee, either 1% of the outstanding mortgage or AED 10,000, whichever is lower.

And there you have it! Your mortgage is now complete.

If you are seeking assistance through your first mortgage or require expert advice, get in touch with our Head of Mortgage Services, Stuart Roe for more information or click here to check out our Mortgage Calculator!

And if you are looking to understand the market better, don’t miss out on our Taking Care of Business podcast on Mortgages with COO; Carl Allsopp and Head of Mortgage Services; Stuart Roe, which spans over the mortgage rates, and some commonly asked questions for first-time buyers.