First timer's guide: how to get a mortgage 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 just how easily you could own a home in Dubai while making affordable monthly payments?

It's called a mortgage of course! And here’s your guide to navigating through mortgages in Dubai!

First things first: What is a mortgage?

A mortgage is a financial structure that allows you to purchase a property by borrowing money from a lender, which is usually a bank - which is secured against the value of your home until you repay the loan in full.

Now, the amount you can borrow is determined by the property's value, known as the loan-to-value ratio (LTV). And there are different mortgage types you can choose from, which can work for you.

What types of mortgages can you choose from?

There are two types in Dubai that work for banks, fixed and variable.

Fixed-rate mortgage

Fixed-rate mortgages are usually a safer bet for first-time mortgage buyers, as with a fixed-rate mortgage, the interest rate you pay remains unchanged for a set period.

This stays unchanged 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 a rather fluctuating mortgage option, which can either rise or fall.

The interest rate you pay is determined by the EIBOR (Emirates Interbank Offered Rate), which represents the rate at which banks lend to one another, together with a fixed percentage determined by your lender.

How can you obtain a mortgage in Dubai?

Obtaining a mortgage in Dubai is quite simple and usually requires a few simple steps to get through:

Checking your eligibility:

When you apply for a mortgage, you have to follow certain eligibility criteria for obtaining a mortgage in Dubai, which includes:

Age - Applicants usually need to be between 21 and 65 years old. Income - A stable income is required, or proof of income is required. Some banks may have a minimum salary requirement. Employment - You should be employed or have a stable source of income. Self-employed individuals may need to provide additional documentation. Credit History - A good credit history increases your chances of approval.

Gather the right documentation for your pre-approval

Before applying for a mortgage in Dubai, we recommend having a set of general documents at hand.

Each bank or financier may have a few extra requirements, but here are the documents you would need as a rule of thumb:

If you are employed by a company:

• A salary certificate to the bank with all the necessary information
• A list of liabilities or loans to your name
• Copy of your passport front/back and your stamped visa copy
• Copy of your Emirates ID
• 6 months bank statements
• Latest payslips (up to six months)
• Proof of employment
• Proof of your current address, you could bring a copy of your DEWA bill or tenancy agreement (these need to be in your name or an NOC will be required from the original owner)

If you’re self-employed:

• A company trade licence copy
• Incorporation documents
• Memorandum of association
• Shareholder’s certificate
• Company profile
• A list of liabilities or loans to your name
• Copy of your passport front/back and your stamped visa copy
• Copy of your Emirates ID
• 6 months bank statements and 12 months company bank statements
• Proof of your current address – a copy of DEWA bills or tenancy agreement these need to be in your name or an NOC will be required from the original owner)

Find the ideal mortgage type

After you’ve prepared all the documents at hand, it's time to find the ideal mortgage that suits you best!

As mentioned, there are many different types of mortgage loans in Dubai and multiple financing options as well.

The most important factors to consider when choosing a mortgage type are:

• Your way of living
• Your desired type of real estate
• Your required loan amount
• Your maximum affordable cash deposit

Once done with the identification, you could use the help of a mortgage calculator to see if your selected property fits your budget.

Apply for pre-approval

Before getting a mortgage you need to get a pre-approval and this will give you an idea of how much you can borrow and show sellers that you are a serious buyer. The pre-approval process involves an initial assessment of your financial status and then allows you to be able to apply for a mortgage.

You can take a look at the process of applying for a pre-approval here.

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

The most favourable 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.