A mortgage loan is a type of secured loan that is secured by the borrowers' residential or commercial property and is given by banks or other financial organizations. Borrowers can put the money they save by maintaining the property as security until the loan is paid off for a variety of things, including expanding their business, paying medical bills, funding their children's education, and so on.
Mortgage in UAE
The United Arab Emirates has grown in popularity as a destination for expats throughout the years, particularly in Abu Dhabi and Dubai (as these Emirates are business-friendly). To keep up with this trend, the UAE mortgage market has developed into a well-established market, with local and foreign lenders offering house loans to expats.
Expats in the UAE can apply for a buy-to-let mortgage as well as a residential mortgage. The lending criteria, on the other hand, may range from one lender to the next and from one borrower to the next.
Feature & Benefits of Mortgage Loan in UAE
Here's a quick summary of mortgage loan features and perks to discover why they're so popular among UAE residents.
- There are two types of mortgage loans available in the United Arab Emirates: fixed and variable.
- Borrowers who finance the purchase of their home with a mortgage are more likely to make a long-term commitment.
- Borrowers' deposit amounts will vary depending on their circumstances and the exact property they intend to invest in.
- Borrowers can also re-mortgage the loan if they choose to. The word "re-mortgaging" refers to switching lenders during the loan's term so that the borrower can take advantage of lower interest rates or better lending possibilities.
Comparison between Personal Loan & Mortgage Loan Interest Rates
In comparison to personal loans, mortgage loans have a lower rate of interest and a longer repayment period Mortgage Loan Types.
A mortgage can be obtained in the UAE at either a variable or fixed rate. Fixed terms are normally around 5 years long; however, they can be as short as one year. When the fixed term expires, the agreement is converted to the bank's variable rate.
A fixed-rate mortgage gives borrowers certainty regarding the size of their monthly payments for a certain period. However, if the rate of interest appears to be declining, it would be a smart idea to investigate a variable agreement. The loan is normally for 25 years, and the payback must be completed before the borrower reaches the age of 70.
Fixed Rate Mortgage
Mortgage with a fixed rate. It's the most simple one, in which you agree on a set interest rate percentage before the loan period begins.
It's a fantastic alternative because it won't be influenced by future events, allowing you to determine the exact amount you'll pay in each installment for the entire period with no variation.
Variable Rate Mortgage
Mortgage with a variable rate. This type has a variable interest rate, as the name implies. It varies depending on the market or any new rules enacted.
It's a two-edged sword since the drop or increase is unforeseeable. Just make sure you're financially secure before going with this option to ensure you'll be able to afford any increases.
Top 5 Mortgage Rates in the United Arab Emirates in 2022
Here are the top 5 mortgages Loan offered in the UAE
RAKBANK Home in One
RAKBANK Home in One combines home financing and current account management. The interest on the loan is computed on a regular basis, and you can withdraw the funds at any moment.
Furthermore, the lowering rate is 2.69 percent, with the rate fluctuating throughout the repayment time.
The lowest wage criterion for this loan is AED 15,000, and there is almost no limit to the amount of mortgage you can take out.
You can also take out a loan for up to 25 years and invest in real estate in Abu Dhabi, RAK, and Dubai.
The property in question must be ready, and you can only invest in a property that is still under construction.
Standard Chartered Mortgage One
It is one of the world's most reputable banks, and you can expect some of the best rates and services.
The bank has set the lowering rate at around 3.49 percent under the Mortgage One plan, while the fixed rate is set at 2%.
Over a period of 25 years, which is also the maximum duration, the fixed rate tends to fluctuate. The rate, on the other hand, will continue to remain around 2%.
This mortgage will have a shorter term because the majority of the payments will go toward the principle rather than interest.
Expats can get a CBD mortgage loan
CBD is giving expatriates a lucrative mortgage loan. Over the course of 25 years, the bank offers a low fixed rate of around 2.1 percent, with a lowering rate of around 2.99 percent per year.
Salaried employees must have a minimum salary of AED 12000, while self-employed individuals must have a minimum salary of AED 20,000.
The bank is willing to lend you up to AED 10 million. However, in order to get a loan, the property must be finished.
Emirates Islamic Manzili Home Finance
One of the lowest mortgage rates in the UAE is offered by this bank. The fixed rate is just 1.81 percent, and it is changed every 25 years.
Furthermore, the annual decline rate is at 3.2 percent. For this mortgage, a minimum salary of AED 15000 is required.
To qualify for this mortgage, you must have been salaried at your present work for at least six months. You will also receive a credit card and a two-month installment deferral in addition to the mortgage.
United Arab Bank Home Finance for UAE National
The bank has a low fixed rate of 1.69 percent adjusted for 25 years and a 2.99 percent decreasing rate.
Furthermore, a minimum wage of AED 15,000 is required, with a higher need of AED 50,000 for self-employed individuals.
UAB is willing to lend you up to AED 10 million for any property.
In the United Arab Emirates, who is eligible for a Mortgage Loan?
Residents in the UAE can get a mortgage, but they must meet certain eligibility requirements.
- They must work for their current company for at least 6 months or a year, depending on the lender's standards and the location they are purchasing in.
- The self-employed borrowers' businesses should have been operational for at least two years.
- A pre-existing relationship between the borrower and the bank can be advantageous because the bank will be familiar with your circumstances.
- Some lenders will only accept applications from people who work for a specific company. As a result, those who work for a bank, a multinational corporation, or a government agency may be able to apply quickly. If the employer is newer or smaller, however, the applicants may find it difficult to obtain a loan from a lender, even if they are creditworthy.
- When applying for a loan, it is vital to have a strong credit history because lenders are more likely to reject applicants with bad credit. With this in mind, consumers should hold off on applying for a mortgage until they have evaluated their credit report and addressed any difficulties (if any)
- Those who do not have credit should use a credit card and pay it off in full each month to establish a credit history.
Documents Required for a Mortgage in the United Arab Emirates
Depending on the bank, different documentation may be requested when applying for a mortgage. The following documents may be requested by the lenders.
- Emirates ID (for UAE Nationals)
- Passport (copy), residence proof in the UAE, and current address proof (for expats)
- Financial documents including bank statements, salary proof, trade license (for self-employed), etc.
Step-by-Step Guide to Getting a Mortgage
The essential steps in obtaining a mortgage are outlined here.
- Choosing whether to hire a broker, approach the bank directly, or apply online.
- To select the right type of mortgage, you need to do a lot of research.
- Obtaining a letter of evidence from the lender after reaching an agreement in principle.
- Finding a perfect property that is well within the applicant's budget and making an offer.
- Payment of the deposit for confirming the purchase and defining the completion date after the price has been determined.
- The lender will release funds to the seller on the completion date.
In the UAE, foreign purchasers can buy apartments and houses in certain regions and the dream of buying a house can be fulfilled by getting home loans. Our experts at Dhanguard will assist you and help you to choose best home loan plan for you and your family, to know more about the process you can connect to us and get the best consultation