The approval process for home loans is often perplexing for first-time house buyers. As a result, we've put up this guide to explain all you need to know about loans and bring you through the processes of a pre-approved home loan procedure.
The United Arab Emirates is becoming increasingly popular as a business location, particularly in Dubai and Abu Dhabi. As a result of this trend, the Dubai mortgage market is now well-established, with both foreign and local banks giving house loans to UAE residents and expats.
To begin, be aware of the upfront charges of pre-approval. Anyone who is not a UAE resident must deposit a minimum of 25% of the total purchase price as a down payment until the property reaches a value of AED 5 million or more, according to the UAE Central Bank. In addition, the Land Department in Dubai levies a 4% transfer fee and a 0.25 percent registration cost, totalling 0.25 percent of the entire mortgage.
The Procedure to Get a Pre-approved Home Loan
Due to a variety of reasons, the loan process can differ from one borrower to the next. As a result, your experience may differ slightly from the one described below.
The six processes that typically occur before a bank approves a home loan are outlined here:
Preapproval for a Home Loan
When a bank examines your financial status (especially your income, assets, and obligations) to see if you're a good candidate for a loan, they call it pre-approval. They'll also inform you how much money they're willing to lend you and provide you with a note of pre-approval. At this point, the lender may review your credit reports and scores.
Inspection of the House and Purchase Agreement
You can browse more comfortably inside that price range once you've been pre-approved for a particular amount. That takes us to the second important phase in the mortgage approval process: looking for a home. At this point, your mortgage lender isn't really interested. The buyers and their real estate agents undertake the majority of the house hunting.
Application for a Home Loan
Because most banks use the same form, this is a simple step in the process. The application requests information on the property being acquired, the type of loan being used, and you, the borrower.
Processing of Home Loans
Your file will continue into the processing step once you have a purchase agreement and a completed loan application. Another crucial step in the mortgage loan approval process is this. Loan processors gather a number of documentation about you, the borrower, as well as the property you're buying. They'll go over the paperwork to make sure it has all of the necessary documentation for the underwriting procedure. A credit report or a house appraisal may be ordered by the loan processor to evaluate the property's value.
Underwriting a Mortgage
During the mortgage approval process, the underwriter is the most important decision-maker. If the loan does not match certain pre-established standards, he has the authority to refuse it. The underwriter will double-check that the property and the borrower meet the eligibility requirements for the specific mortgage product or programme being used, as well as assess the risk level connected with your loan.
Approval and Closing of a Home Loan
If the mortgage underwriter is satisfied that the borrower and the property being acquired meet all of the rules and regulations, the loan will be marked "clear to close." This indicates that all requirements have been completed, the loan can now be funded, and the approval process has come to an end. The final stage in the mortgage approval process is closing.
What are the Various Home Loans Available in the Dubai?
Fixed-rate and variable-rate mortgages are available in the UAE. Fixed terms are typically five years long, although they can be as short as one year. The agreement switches to the bank's variable rate at the end of the fixed period. Fixed-rate mortgages give you certainty about the size of your payments for a certain period of time, but variable-rate mortgages are worth considering if interest rates are expected to fall. The loan is normally for a period of 25 years, and it must be repaid before the age of 70.
What Documents are required to obtain a Pre-Approved Home Loan in Dubai?
The documentation you'll need to apply for a mortgage will differ depending on which bank you go with. The following information is likely to be requested by banks:
- A certified copy of your passport
- Proof of UAE residency as well as proof of your current address are required.
- Proof of salary, bank statements, or your tax return are all examples of financial papers.
Reasons Why You Should Get Pre-Approved Home Loan
The Following are the Reasons for getting a Pre-approved Home Loan in Dubai:
- To begin with, Dhanguard will assist you in developing a precise budget for your new home.
- As a result, there will be no pain later on when you discover that your dream home is completely out of your price range.
- With a clear budget, you'll be able to choose a town where you may buy a home without burning a hole in your pocket, as property rates differ by area.
- Having a pre-approved home loan can help to speed up the process. The rest of the procedure will be relatively easier to manage now that the money are in place.
- A home loan that has been pre-approved provides added security. When signing the sales agreement, the buyer must put down a 10% deposit. The sum paid up front is not refundable if they fail to arrange funds at the time of purchase. There will be no such problem if funds have been granted.
Criteria for a Pre-approved Home Loan
Banks and mortgage brokers assess the applicant's credit history as part of the eligibility criterion. Aside from that, their financial situation and outstanding debts are examined. Always keep in mind that some banks will only offer loans to applicants who earn a particular amount of money each month. Apart from the financial conditions, the lender requests crucial papers such as bank statements, passports, visa copies, Emirates ID, and so on.
It's crucial to remember that just because you match the criteria and your application has been approved doesn't imply you'll get the money right away. You will be handed a "pre-approval letter" at first. This paper will act as proof of your ability to borrow money. As a result, you'll be able to display it to sales agents and begin looking for flats for sale in Dubai.
Getting your home loan authorised and getting a Pre-approved Home Loan in Dubai is a goal worth pursuing, but you must follow the steps to do so. With the correct house loan plans, you may have your ideal home and a secure future in the UAE. Simply scroll down to locate Dhanguard Premium offers to acquire your Home Loan without making any mistakes, at the lowest cost, and with the transaction done successfully at your fingertips in your preferred location.