Your Mortgage Questions Answered: Everything You Need to Know

Buying a home in Dubai is a dream for many, and you can take the first step towards your dream by understanding the various mortgage options. There are several financial institutions in Dubai that offer different mortgage options, each with its own set of advantages and disadvantages. However, buying a property through a mortgage is a process that involves multiple steps. So, for your convenience, we have compiled a list of the most commonly asked questions about getting a mortgage in Dubai.

What are the Different Types of Mortgages In Dubai?

To fulfil the needs of every customer, financial institutions and banks offer different types of home mortgages, each with its pros and cons. Let’s have a look at each type.

Fixed-Rate Mortgages: As the name suggests, the predetermined interest rate in this type remains unchanged for a specific period, usually less than five years.

Variable Rate Mortgages: Unlike fixed-rate mortgages, this type has variable interest rates that can be increased or decreased according to the loan terms. The change in the interest rate is based on the Emirates Interbank Offered Rate (EIBOR).

Capped Mortgages: In a capped mortgage, the interest rate can fluctuate based on the market conditions, but it cannot exceed the predetermined capped limit set by the lender.

Remortgages: As the name suggests, a remortgage is an acquisition of a new mortgage to waive the existing one and obtain lower interest rates, better repayment terms, or equity release from your property. 

Offset Mortgage: In an offset mortgage, the borrower can link the loan account to another deposit account. In case of delayed payments, the lender can withdraw money from the deposit account to clear the dues. 

Investment Mortgage: An investment mortgage is used to buy property for investment purposes and generate income through capital appreciation or rent. 

Non-Resident Mortgage: This type of mortgage is designed for expats who want to invest in Dubai’s real estate market.

Islamic Mortgage: Islamic mortgages are available for those borrowers who don’t want to pay interest. These home loans are also known as Sharia-compliant mortgages.

What are the Eligibility Criteria for Getting a Mortgage in Dubai?

As you want to buy a home in Dubai through a mortgage, you must meet the following eligibility criteria to qualify for a mortgage to purchase a property.  

• The borrower must be a UAE national or resident. 
• The age of the borrower must be at least 21 years or less than 65 years.
• Must have a stable source of income and a good credit score. 
• The monthly income should be at least AED 15k for salaried individuals and AED 25k for self-employed.
• The borrower must clear the mortgage payments before retirement.

What are the Key Points to Consider When Applying for a Mortgage?

The following key points should be kept in mind when applying for a home loan in Dubai. 

Choice of Interest Rate Structure: When you are in talks with a financial institution for a mortgage, you should carefully choose the interest rate structure after considering the pros and cons of variable and fixed interest rates before making the final decision.

Mortgage Tenure: The mortgage duration should be considered carefully when applying for a home loan. You can take your financial goals and obligations into account to make the decision.

Equated Monthly Installments (EMI): This is the monthly payment you make to your lender during the mortgage tenure. It includes the principal and interest amount. 

Debt Burden Ratio (DBR): This is the ratio between the borrower’s total monthly income and debt. The DBR must be less than 50% to apply for a mortgage in Dubai. 

Choice of Bank or Financial Institution: It is the most important point to consider when applying for a mortgage in Dubai. Your lender must be well-reputed, have a good history of dealing with clients, and offer strong customer service. 

What is the Maximum Tenure You can Avail of for a Home Mortgage?

In Dubai, the maximum tenure to avail of a home mortgage is 25 years. This limit is subject to the applicant’s age remaining within 65 years for salaried people and 70 years for self-employed individuals. Let’s say that a salaried individual, currently 45 years old, is applying for a home loan in Dubai, and the maximum loan tenure for that person would be 20 years (45 to 65 years). If the applicant is self-employed, the maximum tenure would be 25 years (45 to 70 years). Whatever the case is, the mortgage period will not exceed 25 years in any case.

Why Do You Need Pre-Approval For A Mortgage?

Although it is not compulsory to be pre-approved for a mortgage, getting one will ensure that you get the home loan from your lender. A mortgage pre-approval will also confirm the maximum amount you can avail from the financial institution. With pre-approval, you can finalise the property you want to purchase, arrange the down payment, and start the property valuation process. 

Finding the right home mortgage is important when buying a home in Dubai. With all these important questions, your home mortgage hunt in Dubai will become easy. It is always best to seek advice from a professional mortgage broker. So, contact us today for expert mortgage broker services.