At present, Dubai’s property mortgage market has grown to more than 50 lenders who offer over 150 diverse products. These mortgage offerings vary in regards to terms and conditions as well as product features and limitations.
With so many options to choose, how do you identify a product which is suitable for your own unique circumstances? A professional mortgage consultant is armed with the market research and analysis to help you make the most of the right mortgage product. It’ll save you lots of time and energy in the process, not to mention the stress of trying to identify the strengths and limitations of each product.
Here are a few everyday examples of the kind of questions and challenges people face when trying to determine how to make the most of their Dubai mortgage.
I’ve been an investor in Dubai for many years; how do I get a mortgage for multiple properties and what are the rates and/or procedures?
Banks generally provide a mortgage for up to two properties, though there are those which provide for more than two. There’s something called loan-to-value and profit rates; the maximum you can get largely depends on the chosen lender.
According to Central Bank Guidelines, if an expatriate purchases his/her first property valued at under AED 5 million, he/she can borrow no more than 75% of the property value. If it is over that amount, it comes to 65%. For a second property purchase and subsequent purchases, you get 60%.
Now, if a UAE national buys a piece of property under AED 5 million, he/she is eligible to borrow up to 80% of the property value. For over AED 5 million, it comes to 70%. For a second or subsequent purchases, 65%. However, for the purchase of off-plan properties, a 50% deposit is required from UAE nationals as well as expats.
So how do you determine the best rate? A detailed business assessment is required along with your lending profile and future plans. Lenders do their own homework by looking up your past and current financial position as well as your work/business, which determines your ability to pay a mortgage. Central Bank guidelines state that the total ‘debt burden ratio’ must not go over 50% of the mortgagee’s income.
I’m planning to buy off-plan property in Dubai – can I take a mortgage from a bank? What’s the criterion for that and the maximum loan-to-value I can get?
Banks do finance off-plan developments. Unfortunately, only select ones offer it to their clients. Central Bank rules dictate that the maximum LTV, loan-to-value, for off plan purchases is 50%, irrespective of the buyer’s purpose, value or category.
Banks are only willing to extend Dubai mortgage support to properties that are under the umbrella of a master developer, with the exception of certain privately funded projects. In order to qualify, you dish out 50% of the property’s value as down payment while the remaining 50% is taken care of by the bank. Once the payment is complete, the bank charges interest. Both the developer and client must register the property with the Dubai Land Department which will then issue a pre-registration document called “Oqood”. This is needed by the bank when releasing payment to the developer.
I’m interested in a few Dubai properties for sale; my salary is under AED 25,000. Realistically, how much do I need to save to pay off the mortgage?
Do you have a financial security and back-up plan? Have you done extensive research and given careful consideration to what your financial and lifestyle goals are, say, for the next 10-20 years? Before setting out to find Dubai property for sale, get in touch with a mortgage adviser and understand how much you can borrow to begin with. This is necessary to know what price range you’ll be looking at and how much you can afford to pay up front.
Keep in mind that banks consider 50% of your total earnings as qualifying income which determines the maximum loan amount or value. As a general rule of thumb, it is good to have at least 6 months worth of expenses (includes EMI) in a savings account. It’s also very important to invest in a way so that your investment corpus fund value clicks with half of the outstanding principal – the corpus fund after all, has to be used to redeem some of the outstanding mortgage payment.
When it comes to property matters, particularly mortgages, guess work is something that should always be avoided. Leave it up to a RERA-certified property expert who also understands the unique intricacies of mortgage products.