Getting a mortgage: 5 tips for expats in Dubai

If you’re an expat looking to buy a home in Dubai, map out your mortgage plan first. Assuming you’re not paying cash, that is.

With properties selling like the proverbial hotcakes, you need to be capable of making an offer quickly or you’ll end up missing out on your dream home.

We rounded up the best recommendations so you can get the edge on the competition. Here are five tips to help get the mortgage you want.

Secure your downpayment

One of the largest costs you’ll face upfront with a mortgage? the downpayment. It’s a good-faith deposit of sorts.

For ex-pats, that’s a 20% downpayment for the purchase for properties under AED 5 million. This is where your savings and investments come into play. So, get a good grip of your finances and establish where you’ll be sourcing this sum from.

If you are looking to get a luxury property mortgage (over AED 5 million) there is a 30% deposit requirement (25% for UAE nationals), or 35% when purchasing a second or subsequent property. 

Get your documents ready

Getting a mortgage involves paperwork. A lot of it! Stay organized and ensure you got them all ready.

The basics include a copy of your passport, visa, Emirates ID, salary certificate, trade license for self-employed individuals, and bank statements. Some may require other supporting documents to verify employment, income sources and liabilities.

Check your credit

To evaluate what kind of borrower you are and will be, banks carry out credit checks.

How you manage your finances is reflected in your credit score. A long track record of responsible credit use is good for your rating. Meanwhile, missed payments, mortgage defaults, and bankruptcy can be seen as red flags.

In the UAE, the Al Etihad Credit Bureau (AECB) is responsible for issuing credit reports. Get a headstart and check your credit score from their official website.

Boost your borrowing power

In general, banks limit mortgage lending to no more than 25% of your monthly income.

Pay attention to your outstanding debts. That includes credit cards, personal loans, and car loans, lease agreements, and other ongoing financial commitments.

What you have left is your disposable income. Banks use this to assess how much you can afford in repayments.

Consider tenure and fees

In the UAE, the maximum period for repayment is 25 years. When looking for the best mortgage, the interest rate matters.

A longer tenure costs less per month. Although you pay more in total because of higher interest over a longer term. Conversely, while a shorter tenure costs more, you pay less in total due to lower interest rates charged.

Also, look beyond interest alone. Watch out for setup, conveyancing and penalty fees.

Get a mortgage pre-approval

If you’re shopping for a home, boost your confidence and your buying power by getting your mortgage pre-approved.

For one, a pre-approval lets you know how much you can spend. Second, you’ll be able to lock in a great mortgage rate offer ahead of time. Lastly, it signals to sellers that you have no problem financing the purchase, making them more likely to accept your offer.

It pays to be prepared, doesn’t it? It goes without saying that it is still best to seek help from professionals to navigate this — we’d be happy to help!

In the meanwhile, we hope these tips prove useful to you.