Dubai’s allure as a real estate hub is undeniable, with 50-60% of property buyers being non-residents. But how does Dubai’s mortgage landscape accommodate this vast international clientele? Understanding Mortgages In Dubai.

Dubai banks primarily offer two mortgage categories: one tailored for citizens of the UAE and resident expats, offering up to 85% funding on their first property and 60% for any investments that follow, and another designed for non-residents eager to tap into the real estate market and expand their investment portfolio. A notable highlight is that non-residents aren’t left in the lurch; they can secure up to 60% funding of the property value based on their income from their home country. 

Similar to other global markets, mortgage interest rates are primarily of 2 kinds – fixed term and variable. Fixed interest rates are set by individual banks for a specific period of time [eg: currently the lowest interest rate is 4.24% fixed for 3 years] and variable rates are a base rate set by banks + an EIBOR rate [Emirates Inter Bank Offering Rate] which is an average of the daily base rates that banks offer and is set by the Central Bank of the UAE on a daily basis, variable rates are offered at shorter fixed periods, the most common being 3 months [eg: 0.99% + 3 month EIBOR].  

Let’s explore these mortgage types in depth, focusing on their unique aspects and funding provisions. 

 

Exploring Dubai’s Mortgage Spectrum 

1. New Purchase: First-time buyers turn to the New Purchase mortgage as their avenue to property ownership. This mortgage option enables individuals to secure a loan for either a brand-new property or a resale. The loan amount is typically determined by the buyer’s income and debt-to-income ratio. 
2. Buyout/Refinance: This mortgage product offers borrowers an opportunity to buyout of a current mortgage and switch a new mortgage either with the same lender or a new one, if you find a more favorable interest rate or better terms, this potentially leads to considerable savings in the long run.
3. Handover Payment: Visionaries who’ve invested in off-plan properties can rely on the Handover Payment mortgage when their property reaches completion and buyers are expected to pay a lump sum of approximately 30 – 70% of the property value. The process for applying for a handover payment can begin as soon as the buyer receives the handover notice from the developer, thereby ensuring the final payment is made, allowing owners to claim their property.
4. Equity-Release: Equity-Release offers property owners a unique opportunity to release funds against their property. These funds can be used for renovation of the existing property, business investments or personal use. A great way to build your investment portfolio is to release equity from one property and use the funds to invest in another one. With rental ROI’s in Dubai generally around 6-8%, more often than not, the rental income will cover the new mortgage EMI and in some cases even provide you with surplus income. Equity-release mortgages can also be paired with both buyout and handover payment schemes for added flexibility.
5. Offset Mortgages: Exclusively available to Dubai residents, Offset mortgages merge innovation with flexibility by connecting a mortgage to current accounts. The interest calculation is based on the balance maintained in the account. By offsetting the loan value against the available funds thereby benefiting the owner: the more savings you have in your account, the less interest you pay.

Navigating Dubai’s extensive mortgage landscape can seem daunting. However, arming yourself with knowledge of the varied options, assessing your unique financial situation, and seeking expert guidance can significantly simplify the process. And with the prospect of a long-term golden visa, real estate investment becomes even more enticing!

At My Mortgage, our adept consultants harness cutting-edge algorithms to sift through a range of mortgage products, ensuring you receive recommendations tailored to your needs. With a trusted mortgage advisor by your side, your Dubai property acquisition journey becomes an exhilarating and smooth experience.