UAE Mortgage Interest Rates

UAE attracts investors due to its friendly business climate, tax benefits, and its development of residency permit programs. The state stimulates the mortgage lending sector, while the majority of banks are prepared to lend money to foreign investors. However, the loan requirements here are more strict for foreign lenders.

Mortgage Financing in UAE

The UAE Central Bank has proposed steps to boost the real estate sector during the Covid-19 pandemic. For instance, the down payment was cut by 5%, making mortgage costs more accessible. Residents and UAE nationals can now borrow up to 80% of the cost of their dream home, respectively.

In the Emirates, a rental home typically costs 6–10% of the property's market value. Even if you pay interest on the loan, this ratio enables you to earn money from real estate.

Bank financing of up to 80% of the real estate's worth is available to foreigners who are UAE residents. The type of property and the client's well-being determine the maximum loan amount.

Non-residents can receive loans up to 50% (or, in certain circumstances, 70%) of the property price.

Mortgage for Foreigners in the UAE

The client's ability to repay the loan is the most crucial factor in a bank's decision to grant a loan to someone with a resident visa.

Most banks want a paid certificate and a bank statement for the last six months from workers. And an audit report for the last two years must be provided by the entrepreneurs. You need to have a clean credit history. If there are some additional sources of income, such sources may also be considered.

Banks frequently begin their analysis of a client's reliability, assuming that if all loan payments have been made, the borrower would have at least 3,500 dirhams of monthly income per family. At the same time, total loan payments can be at most 50% of revenue.

People over 50 are typically turned down for loans since many banks only offer mortgages for a loan term of no longer than 15-20 years. Typically, banks demand that borrowers be between the ages of 65 and 70 at the time of complete loan payback and no younger than 21 at the time of application.

Banks will finance up to 90% of the property's worth for ex-pats, leaving them to cover the remaining 10% independently. Banks will only provide financing for non-residents up to 70%.

Mortgage loan rates in UAE banks range from 4-7% annually, depending on the company providing the service, the particular property, and whether the loan is primary or secondary.

Key Terms of Mortgage Finance

Here is a glossary of terms in the home loans industry that can help you:

You can learn more about these terms here.

Types of Mortgages

The following are some of the most prevalent home loan services offered in the United Arab Emirates.

1. Fixed-rate mortgages

This kind of home loan solution has a pre-determined interest rate that stays the same for a specific repayment period. Before the repayment loan period starts, the mortgage lender chooses the rate that will apply to the principal. So many aspects need to be considered before buying a property in Dubai.

2. Discounted rate mortgage

The interest on this variable rate mortgage is set at a percentage lower than the lender's base rate. Official lenders frequently provide introductory loans to first-time home buyers through discounted-rate home loans.

One of the types of loans available in Dubai gives the borrower a break on the lender's usual interest rate. The borrower then pays back the money over a specific time, often 2–5 years, at a reduced rate.

3. Capped mortgage

It is a variable-rate home loan with a marginal interest rate among the several types of mortgages available in Dubai. Your payments are not permitted to exceed this marginal interest rate, often known as an interest rate cap. The average amortization time for this mortgage type in Dubai is 2 to 5 years. 

A home loan with a mortgage financing cap restricts the borrower from changing EIBOR (The Emirates Interbank Offered Rate). If the EIBOR increases, your monthly payment will climb proportionately but not more than the specified ceiling.

4. Remontage

Refinancing or remortgaging refers to obtaining a new loan to replace an existing one for the same amount or more. The main purpose is to withdraw property ownership. If the second loan value is the same as what you still owe on your existing UAE repayment mortgages, a remortgage may also be regarded as a personal loans renewal.

5. Offset mortgage

This outstanding loan is linked to multiple deposit accounts. Borrowers can link their savings account to those used for mortgage repayment periods. This enables you to pay your debt off early using your savings temporarily.

The money in the connected account is always available to you. However, your lender will immediately get the money if you select standard overpayments.

6. Investment mortgage

One of the mortgages available to you in Dubai is an investment mortgage. In this case, the goal is to find a new source of income by selling or renting a property.

7. Non-resident mortgage

Non-residents of the UAE are eligible to apply for a non-resident mortgage. A bank that provides non-resident home loans typically contributes only up to 50% of the property's value. Additionally, despite the larger monthly installments, the payback duration is shorter.

The Best Mortgage Rates in UAE

RAKBANK Home in One

The bank offers both current account holding and dream home financing. You can take money out whenever you wish, and the loan interest is computed regularly.

You need to make at least AED 10,000 a month to qualify for this personal loan, and the bank will lend up to AED 18 million. A 20% down payment of the property's cost is required.

Additionally, the decrease rate, now 2.69%, may change during the payback time.

CBD Mortgage Loan for Expats

For foreign lenders, CBD provides a profitable mortgage loan. With a decreased rate of around 2.99% annually, the bank offers a low fixed-rate mortgage of only 2.1% over 25 years.

For salaried employees, the minimum salary needed is AED 12000, while for self-employed individuals, the minimum salary requirement is AED 20,000 or more.

You can get a loan from the bank for up to AED 10 million. To obtain the financing, the property must be finished, though.

Emirates Islamic Manzili Home Finance

One of the most affordable mortgage rates in the UAE is offered by the bank. Only 1.81% is the fixed rate, modified every 25 years.

Additionally, the annual decline rate is about 3.2%. This mortgage agreement has a minimum wage requirement of AED 15,000.

United Arab Bank Home Finance for UAE National

A low fixed rate of 1.69% adjusted for 25 years is available from the bank, along with a lowering rate of 2.99%.

Additionally, the minimum wage needed is AED 15,000 for employees and AED 50,000 for self-employed people.

F.A.Q.

What are bank requirements for borrowers?

The borrower must be 21 years old to sign the mortgage agreements. Additionally, mortgage loans are only given to applicants who have not yet achieved retirement age (65 years of age) following the Central Bank of the UAE's standards. The personal loan duration will be shorter, and the monthly payments will be greater, the closer the applicant is to the retirement age cap.

Bank requirements for real estate

Only select locations known as freehold areas in the UAE allow foreigners to own property in Dubai. The property will need to be examined while creating a loan arrangement. To get a loan for an apartment, the borrower must:

• Have a clear credit history;
• Have a formal job;
• Have higher education;
• Have a residence permit in the city where the apartment will be purchased.

What document do I need?

The standard set includes:

• Application for a mortgage loan;
• A copy of the passport;
• A copy of the resident visa (if you have a residence permit);
• An extract from the bank on the status of the current bank account and the movement of funds for the last six months;
• A certificate from the place of work indicating the position and salary;
• Organization registration documents: the company's charter, the result of the audit of the legal entity (if the borrower works for himself, runs a business);
• Documents confirming other sources of income (dividends, income from renting real estate).