Are there Issues Getting a Mortgage when you are Self Employed in the UAE?

By Sakshi Srivastava - 31 Jan 2022 Last Updated: 17 May 2022
Are there Issues Getting a Mortgage when you are Self Employed in the UAE?

Dubai has shown to be an excellent destination in which to start a business and provide for your family, but you may be wondering if there are any issues getting a mortgage when you are self-employed. Well, our study further focuses on if there are any issues getting a mortgage when you are self-employed, criteria, and other information regarding mortgage loans for self-employed in the UAE.

What are the Factors that affect Self-Employed Mortgage loans in the UAE?

There are several factors that may be responsible for the rate, amount, and tenure of the mortgage loans which have been discussed below:

Business Stability

When someone borrows money from a moneylender, they are taking a big risk. To mitigate this risk, Dubai's banks will need to determine how likely you are to make your mortgage payments on time. This entails demonstrating the stability of your firm if you're self-employed. Most lenders will expect you to have successfully run your firm for at least two years. The banks in Dubai won't be able to completely analyses the soundness of your business if you've just been in operation for a year or less. This does not rule out the possibility of obtaining a mortgage, but it may be a challenge for some lenders.

Type of Company

If you're self-employed, your mortgage requirements may differ based on whether you're:

  • Sole Proprietorship
  • Limited Liability Company (LLC)
  • Freelancers
  • Free Zone Company
  • Foreign Company Branch
  • Civil Company

As a self-employed person in the UAE, the best way to get started is as a freelancer, but you can also establish a sole proprietorship or a civil company, all of which enable 100% foreign ownership.

A civil corporation can have two or more members, whereas a sole proprietorship can only have one.

A commercial or industrial business is another possibility, but if you're an expat, you'll need a local partner, who may be a UAE national or a corporation.

Regardless of their business structure, it is suggested that all self-employed personnel have professional indemnity insurance in place to protect them. When you're just starting off, the last thing you need is a pricey lawsuit.

Key things that may Improve the Chances of Getting a Mortgage

When you're self-employed, having a steady business considerably boosts your chances of acquiring a mortgage, but it's not the only thing lenders consider. You can assist the process as much as possible by:

Ensure your credit file is free of negative entries: Your credit score will play a big role in whether or not you get a mortgage, and an adverse entry could drop it.

Keeping track of your finances: With a good credit score, you have more possibilities. Ascertain that everything is paid in whole and on time.

Don't overspend on your credit card:

A credit card that is nearly depleted may appear to be in financial hardship, and the larger your credit card usage, the lower your credit score.

Having the Correct License

There are two types of licenses: mainland licenses, which allow you to trade freely both within and outside the country but require you to find a local partner; and free zone licenses, which offer lucrative tax benefits and 100 percent ownership but only allow you to trade within the jurisdiction of your free zone.

You'll need a visa sponsored by the jurisdiction where you'll be working, as well as a medical examination and health insurance if you're going to the UAE from another country.

What are the Eligibility Criteria for Mortgage Loan in the case of Self Employed Individuals?

The following are the eligibility criteria for self-employed individuals seeking a mortgage loan in the UAE:

Minimum Age Requirement

One of the eligibility conditions for obtaining a loan in the UAE is age, which applies to both salaried and self-employed applicants. Those who apply for a self-employed loan must be between the ages of 21 and 60. Unlike loans for expats in the UAE, self-employed individuals can benefit from a maximum age requirement of 65 years.

Minimum Income Requirement

The minimum wage threshold for loans in the United Arab Emirates is slightly greater than that for self-employed applicants. Furthermore, the self-employed personal loan applicant must pay the current cost of their staff to the company, as well as a variety of other charges. Self-employed applicants are expected to have larger monthly wages for these reasons.

Work Experience

Self-employed business owners are exposed to a variety of dangers. Even so, a self-started company that has been in operation for a few years has stood the test of time. Personal loans in the UAE require self-employed applicants to have a minimum number of years of work experience for this purpose.

In order to be eligible for a personal loan in the UAE, you must have worked for at least two years.

Annual Turnover of the Company

An annual sales turnover is not to be confused with the income eligibility for a personal loan; it refers to the entire revenue that a business owner makes over the course of a year. Some of the best personal loans in the UAE also require self-employed people to show the bank a minimum annual sales turnover.

Documentation Required

The documentation required is as follows:

Identity Verification

The applicant must present their Emirates ID to the financial institution as confirmation of identity.

Statement of Accounts

The applicant must produce three months' worth of bank statements, as required by the concerned bank.

Business Evidence

Proof of Business Ownership is required from the applicant.

A Power of Attorney or a Memorandum of Association signed by all members of the business can be used to represent self-employed personal loan applicants.

Passports and Visas

UAE passport and visa. This is only applicable to expats seeking personal loans in the UAE who are self-employed.

Proof of Address

The applicant must provide proof of address in the form of utility bills.

Conclusion

Applying for a mortgage as a self-employed person might be difficult, especially if you are unfamiliar with Dubai's local customs, but Dhanguard was created to assist everyone in obtaining their dream home in the city.

Self Employed Loan at competitive interest rates in Duabi, UAE. Dhanguard provides details of the process you need to follow in order to acquire a Self Employed Loan.

By Sakshi Srivastava

31-Jan, 2022

Self Employed Loan Related FAQ

Frequently Asked Questions

Get Instant Advice