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Home Loan and Mortgage in Dubai

When looking for apartments or villas in Dubai, potential homeowners frequently search for 'home loans in Dubai.' Similarly, another popular search term is 'home loan for NRI in Dubai.' This is not surprising given the large Indian population in Dubai.

When expats consider moving to Dubai, they want to buy a home that meets their needs while remaining within their budget.

Because many people are searching for the term "home loan in Dubai," Dhanguard as compiled a list of essential information one should be aware of before beginning the application process for home loans in Dubai.

Expats' Guide to Home Loans in Dubai

To offer home loans in Dubai, banks must adhere to a set of criteria. Banks in Dubai typically have four main criteria for home loan eligibility:

  • Time spent in the United Arab Emirates (typically 6 months to a year)
  • Duration of employment in the UAE (typically a minimum of 6 months)
  • A business trip to the UAE (typically 2 to 3 years)
  • History of credit

 Your employer must be on the bank's list. This is a requirement for obtaining a home loan in Dubai.

Pre-Requisites for Home Loans in Dubai

Home loans or mortgages are common in Dubai, as expected, and the UAE Central Bank has established clear guidelines. Home loans for expats in Dubai are granted subject to certain conditions (along with the ones mentioned above).

  • The first step in this procedure is to determine how much money you will need to pay up front. This is usually accomplished by obtaining a bank pre-approval.
  • Second, you'll want to know how long the mortgage will last and whether you want a variable or fixed interest rate. All of these are important factors to consider for any expat looking for Dubai mortgages. Furthermore, there are a few other things to consider when applying for an expat home loan in Dubai.

The Initial Investment

To obtain a home loan in Dubai, expats must make certain payments. These rules are enforced by the UAE Central Bank. Here's what you'll need to save for:

  • A down payment of 25% of the purchase price is required (properties less than AED 5M)
  • The transfer fee is 4%.
  • Mortgage registration fee of 25%
  • The valuation fee ranges between AED 2,500 and AED 3,000.
  • Real estate commission of 2% (can vary)

 Some banks in Dubai allow mortgage applicants to add three-quarters of the total purchase price to their home loan.

Pre-approval of Mortgage

Before you start looking for a house, you should get a mortgage pre-approval. It provides you with a clear confirmation of their budget. This is critical because it allows you to narrow down your search based on your budget. Furthermore, when you sign a sales agreement, you must provide a check for 10% of the purchase price. If you do not have financial approval and are later denied bank financing, you will forfeit the deposit money.

The Sales Contract's Valuation Clause

Make absolutely sure your contract includes a clause for property valuation. A property evaluation will be performed before the bank makes a loan offer. If the appraisal reveals that the property is overpriced, the bank will refuse to lend you money. The valuation clause safeguards the buyer's deposit in this case. Alternatively, the valuation could be completed prior to the sale agreement being signed.

Value of repayment

The bank's repayment plan is usually determined by your monthly income. Most of the time, the repayment value is no more than 25% of your monthly income. If you have any other loans (car loans or other bank repayments), those are deducted as well. Banks use their own proprietary formulas to calculate borrowing capacity (total money offered).

Duration of a Mortgage

In the UAE, the maximum loan period is twenty-five years, with an age limit of 65 years for salaried people and 70 years for self-employed people. Naturally, a longer-term loan reduces your monthly payment while increasing the total interest amount. With a longer-term mortgage in Dubai, your borrowing capacity increases as well.

You can also choose a longer-term loan and reduce the number of years by paying extra each year. You can repay an additional 10% of the principal amount each year with no penalty. It is best to seek professional advice before making any decisions based on your home loan Dubai searches.

Rates on Dubai home loans

The interest rate on a home loan in Dubai can range from 2.99% to 5%. The general trend is that interest rates are falling slightly and are expected to fall further in the future. Things can, however, change. If you choose a fixed-rate loan, it is usually for two years. Following that, a revision rate will be applied. If you paid a lower initial deposit, the revision rate may be higher. You can also get a five-year fixed-rate mortgage. That rate, however, would be on the higher side, typically close to 5%.

Variable interest rate mortgages are another option for home loan Dubai applicants. However, keep in mind that predicting the total amount of money you will have to pay in the long run is difficult. Budgeting accurately is nearly impossible. However, if you have a good understanding of the market and believe that interest rates will fall in the future, variable interest rates will save you money. However, the worst-case scenario should also be considered.

Changing Mortgage Lenders

Switching mortgage providers has become a little easier in recent years. The penalty is now capped at AED 10,000, up from 5% of the amount previously. However, depending on the market situation, negotiating with the bank can often result in more favourable terms.

Purchasing a flat in Dubai or any other property is a significant financial investment that necessitates a significant amount of time and effort. When in doubt, conduct extensive research and seek expert advice  contact Dhanguard . To obtain the best home loan in Dubai, one must put in the effort. With careful research and a little luck, you can find the cheapest home loans in Dubai. Before making a final decision, you can begin your research by learning more about the various types of mortgages.

Conclusion

Getting your Dubai home loan approved is a goal, but you must follow the process to achieve it. You can have your dream home and a secure future with the right home loan in Dubai. If you live in Abu Dhabi, you can contact Dhanguard to learn more about your mortgage options. By investing in UAE real estate, you can also obtain real estate investor visas. For more information on buying properties in Dubai, keep following Dhanguard the UAE's leading real estate blog.

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