Home Loan Finance offers for Expats and Residents in Dubai

By Sakshi Srivastava - 03 Jan 2022 Last Updated: 26 Jan 2022
Home Loan Finance offers for Expats and Residents in Dubai

For many Expats and Residents, the UAE represents the final doorway to higher living standards and a more pleasant environment. If you've recently moved to the UAE and are wondering whether or not you can get a Home Loan Finance, the answer is yes.

We will answer all of your questions about this topic in this article read on to learn how to own a home in the UAE.

Is there any difference between a Home Loan and a Mortgage in the UAE?

When you don't have enough cash to buy a house, you can get a home loan or mortgage from a bank or other official lender. In the United Arab Emirates, a home loan is sometimes referred to as Mortgage

Furthermore, you must pay this sum in monthly installments in addition to the bank or lender's interest rate.

What is the Minimum Down Payment for an Expat Home Loan in the United Arab Emirates?

The amount of a down payment required for a home loan varies depending on the property's price. Expats, on the other hand, often pay a down payment of 25% of the entire unit price.

What is the most Important Factor that a Bank or Lender considers when determining the Loan Amount?

The loan amount is determined by a number of factors, the most essential of which is your salary, which ensures that you will be able to repay the loan over time

Depending on the circumstances, each bank assigns a minimum salary, an interest rate, and the total amount of loan it will grant. Then, based on your budget, you should choose the best deal for you.

Furthermore, among the UAE banks, the one with the lowest mortgage rate is usually the preferred option.

What are the Different Types of Mortgages or Home Loans in the UAE?

In the UAE, there are various types of home loans that vary based on the rate of interest; this is the most important factor to consider when deciding whether the deal is good or not.

The following are the many types of mortgages available in the UAE:

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.

Discount Rate Mortgage

The term "discounted rate mortgage" refers to a loan with During the first months of the loan term, the borrower offers you a reduction in the amount of a set percentage.

You must determine whether this type is appropriate based on the amount you will pay once the discount period expires, or it will be a risky alternative.

Capped Rate Mortgage

Mortgage with a fixed rate cap. This one is similar to the Variable Rate Mortgage in that the interest rate is not fixed; but, before the loan period begins, you agree on a maximum rate of interest.

Whatever market fluctuations occur, the interest rate will not exceed the agreed-upon maximum limit.

Remortgage. This type is ideal if you have already applied for a loan and require an additional one while your current loan is being processed.

Offset Mortgage

 Mortgage with a negative balance. You may now link your loan, savings, and credit accounts with this new feature. As a result, anytime you receive additional funds on any of your accounts, the total interest amount is reduced.

What are the requirements for obtaining a Home loan Finance in the United Arab Emirates?

To apply for a loan, you must meet certain requirements. The following are the prerequisites for obtaining a home loan in the United Arab Emirates:

  • You should have been at your current work for at least six months or a year.
  • Your company should have been in operation for at least two years if you are a business owner.
  • To make getting a loan easier, you should have a good credit history, which demonstrates that you're a reliable person.
  • If you don't already have a credit card, you should consider getting one and utilizing it. Simply make sure to pay it off each month by the due date to establish a good credit history.

What is a Mortgage Principal Agreement?

A first or basic approval from the bank on your loan is known as a mortgage agreement in principle. It will assist you in finding the house you desire and negotiating a good bargain within the budget you've been provided.

What Documents are Required for a Home Loan Finance?

To apply for a home loan as an expat in the UAE, you'll need the following documents:

  • A Proof of your Salary;
  • Copy of your Passport;
  • Proof that you’re residing in the UAE;
  • Bank Statement for the last 3 or 6 months;
  • Proof of your Current Address;
  • Trade License for Business Owners.

What is the Procedure for Obtaining a Home Loan in the UAE?

The application process for a home loan in the United Arab Emirates is simple, follow the steps below:

  • Choose whether to deal directly with a bank or through a Consultancy;
  • Choose the Best Mortgage Plan;
  • Obtain a Letter of Acceptance or a Mortgage Agreement;
  • Pay the deposit to confirm the purchase and the completion date after you've agreed on a pricing.
  • The amount will be paid by the bank or loan lender by the due date.

What are the Banks with the Best Mortgage Rates in the UAE?

Those are the most notable banks in the UAE with the best home loan offers. 

  • HSBC 
  • Mashreq
  • The Commercial Bank of Dubai (CBD) 
  • The United Arab Bank (UAB) 
  • Emirates Islamic.

Is it necessary to have Property Insurance in the UAE if you have a Home Loan?

Yes, it is correct. Property Insurance is required in the UAE when taking out a home loan. You have the option of purchasing the device and its contents as a package or separately, depending on your preferences.

Insurance coverage in the UAE is reasonably priced to protect against future losses.

Conclusion

Even though the UAE has millions of Residents and Expats, many still choose to rent due to the high cost of buying, uncertainty about how long they will be living overseas, or the costs associated with a property purchase. For Home Loan Finance information connect to our experts at Dhanguard and buy the house of your dream.

By Sakshi Srivastava

03-Jan, 2022

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