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Crucial Factors that Affect your Mortgage Loan Interest Rates in Dubai

There are several factors that may affect the mortgage loan interest rates in Dubai. But before that in our study, we will discuss in a brief, Mortgage loan, criteria, eligibility, and Crucial Factors that Affect your Mortgage Loan Interest Rates in Dubai.

What is a Mortgage Loan?

A mortgage loan is a type of loan that is used by real estate buyers to raise cash for a purchase or by current property owners to produce funds for any purpose while establishing a lien on the property being mortgaged. The technique by which the loan is "secured" on the borrower's property is known as mortgage origination. This means that if the borrower defaults on the loan or otherwise fails to meet its terms, a legal process is initiated that allows the lender to seize and sell the secured property in order to repay the loan. Property in Dubai can be purchased in one of two ways: cash or with a mortgage.

Moreover, while a cash investment may be more cost-effective over time, a mortgage gives you more control over your finances. If you want to get a mortgage to buy a home in Dubai, you'll need to know how the emirate's home loans work and what you'll need to do to get one.

What is the Documentation required to apply for a Mortgage Loan in Dubai?

Anyone interested in purchasing a home with a mortgage must first apply for one. To submit a mortgage application in Dubai, there is obviously paperwork involved. The prerequisites for applying for a mortgage in Dubai may differ slightly from one bank to the next, but for the most part, you'll need the following documents:

  • a copy of your visa and passport
  • a copy of your Emirates ID
  • a salary certificate for proof of work
  • proof of residence
  • a copy of your payslips and bank statements for the previous six months
  • a copy of your credit card statements

However, in the case of a non-resident, the documentation required is mentioned below:

  • A copy of your passport
  • Your bank statements for the past three months

What are the Eligibility Criteria for Mortgage Loan in Dubai?

You may easily receive a home loan if you meet the qualifying standards, whether you wish to buy an apartment in Dubai or a villa or townhouse. You can apply for a mortgage in Dubai if you are one of the following people:

  • Between the ages of 21 and 65, a national or resident of the United Arab Emirates
  • Have a salary of between AED 15K and AED 25K every month (self-employed)

It should be noted, however, that the minimum wage for a Dubai property loan differs based on the bank.  Some Dubai banks may consider UAE nationals with a monthly salary of at least AED 8k for home loans, however, this is largely determined by bank requirements.

Also, on the other hand, non-Dubai residents might also check into mortgage options. However, because just a few institutions offer house loans to non-resident property buyers, their options are limited. However, to get a mortgage in Dubai there are certain steps to be followed by both residents as well as non-residents depending on the requirements of the bank which may also vary from institution to institution.

What are the Type of Mortgages available in Dubai?

Dubai's mortgage sector is quite well developed. There are dozens of mortgage providers, ranging from well-known companies to smaller, more localized organizations. Because there are so many options, you'll need to perform some preliminary study to learn how the various products work so you can make an informed decision about which one best meets your needs. You can get a mortgage in Dubai as an expat for a home you want to live in or as an investment property. The amount of deposit you'll be asked to pay can vary based on your circumstances and the individual property you want to buy.

When you're looking for an investment property, you're usually considered as a higher risk, therefore the bank will require a larger initial deposit. Expats purchasing an investment property may be required to pay a deposit of up to 40% of the purchase price up the advance, with a 50% deposit if purchasing off-plan. If you're trying to buy a home to live in, though, the deposit would most likely be in the range of 25%. It's also important to be aware that the quantity of mortgage you can legally receive is limited. The entire amount you must repay as an overseas buyer, including both principal and interest, cannot exceed the total amount you can expect to earn in seven years.

  • A fixed-rate mortgage is one in which the interest rate is guaranteed to stay the same for a set length of time. After this fixed time, the interest rate will revert to a variable rate.
  • A variable mortgage is a polar opposite, as the interest rate on the loan might change every few months. Because a variable mortgage is connected to EIBOR, this is the case.
  • A discounted/introductory offer rate mortgage provides funds at a standard variable rate for a limited time — this sort of transaction is sometimes referred to as an introductory offer.

In conclusion, because it is linked to a fiscal stability mechanism in the UAE known as 'EIBOR,' the variable mortgage plays a more colorful role among all of these products merely because of its volatility. For the duration of your mortgage, this will have a direct impact. As a result, understanding how the system works is critical.

Crucial Factors that affect your Mortgage Loan Interest Rates in Dubai

Given below are some of the factors that may affect the interest rates in Dubai:

  • Income
  • The reputation of the Employer
  • Credit Score
  • Repayment History
  • Debt to Income Ratio
  • Relationship with the Bank

Conclusion

Applying for a loan is often a complex task in Dubai as choosing the right mortgage and choosing the right bank becomes a challenge for the borrowers. If you are looking forward to applying for a mortgage loan in Dubai, connect with Dhanguard, our team of experts will walk you through the process and also assist you to choose the right bank for you. If you are looking for any banking-related services, connect with us, we will gladly assist you.

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