Can Foreigners Get a Mortgage in Dubai

Foreigners Mortgage Types in Dubai

1. Fixed-Rate Mortgage

In a fixed-rate mortgage, the interest rate is predetermined at the start of the loan term and remains constant throughout a specified period, often less than five years.  Sometimes, lenders may offer fixed rates for the entire loan repayment period. The primary advantage is financial predictability; your payments remain consistent regardless of market fluctuations. However, if market rates decrease, you won’t benefit from the lower rates but will be protected against rate increases.

2. Variable Rate Mortgage

Variable or adjustable-rate mortgages fluctuate with market conditions. This type of mortgage can be more risky, as your payments may increase if interest rates rise. However, it can also be beneficial if rates fall. Borrowers need to have the financial flexibility to manage potential increases in repayments.

3. Discounted Rate Mortgage

Particularly attractive for first-time buyers, discounted rate mortgages offer interest rates below the Emirates Interbank Offered Rate (EIBOR). The discount is typically applied for a period of two to five years, after which the rate reverts to the lender’s base variable rate. While this can offer initial savings, rates can increase with the lender’s base rate.

4. Capped Mortgage

Capped mortgages combine the flexibility of a variable rate with the security of a fixed upper limit. Your rate will vary with the market but won’t exceed a pre-agreed cap. This setup offers some predictability in financial planning, although capped rates tend to be higher than discounted rates.

5. Remortgage

Remortgaging involves replacing your existing mortgage with a new one from the same or a different lender. This option is often chosen to secure a lower interest rate, extend the repayment term, or access additional funds.

6. Offset Mortgage

An offset mortgage links your mortgage to your deposit accounts. The balance in these accounts is offset against the mortgage amount, reducing the interest you pay. This flexible option allows access to your funds, but the interest rates can be slightly higher than conventional mortgages.

7. Investment Mortgage

This mortgage type is for purchasing rental or resale properties and is designed for property investment. It applies to multi-unit buildings with up to four units, while larger properties fall under commercial real estate with different lending rules.

1. Non-Resident Mortgage

Non-resident mortgages cater to individuals not residing in the UAE but meet certain criteria, such as being from an approved country and meeting minimum income requirements. This option is tailored for international investors and expatriates.

Dubai’s Foreigners Mortgage Guidelines

You have to follow some legal steps to buy property in Dubai and to apply for a mortgage as a foreigner; those steps are:

Eligibility Conditions for Home Loans in the UAE

Foreigners seeking a home loan in Dubai must meet specific eligibility criteria to ensure a smooth application process. Here are the key requirements:

1. Employment Stability

Applicants should have been in their current job for at least six months to a year. This requirement demonstrates employment stability and a reliable source of income, which are crucial factors for lenders.

2. Business Owners

For entrepreneurs, it’s essential that your business has been operational for at least two years. This stipulation is to ensure the sustainability and financial health of your business.

3. Credit History

A clean credit history is paramount. It simplifies the loan process and reflects your credibility as a borrower. If this is your first time using a credit card, consider obtaining one and ensure timely payments to build a positive credit record.

Required Documents for Non-UAE Residents

When applying for a mortgage loan as a non-resident, certain documents are necessary to validate your eligibility and financial standing. Here’s a general list of the required documents:

• Valid Passport

As proof of identity, a valid passport is required.

• Bank Statements

Submit your bank statements from the last 3 to 6 months as evidence of your financial stability and capacity. Additionally, depending on specific circumstances and the property in question, you may need to provide the following:

• Tax Returns

If applicable, especially for self-employed individuals or those from countries with tax obligations.

• Salary Certificates/Payslips

These are required for salaried individuals to verify income.

• Trade License and Audited Financial Statements

Self-employed applicants have to prove the legitimacy and financial status of their business.

• Details of Existing Loans

Information on any current loans is important for assessing your financial commitments.

How to Apply for a Foreigner Mortgage in Dubai

Securing home finance in UAE as a foreign national is a structured yet straightforward affair. The process, detailed below, is designed to be as seamless as possible for prospective property owners.

1. Choose a Lender

Your journey begins with selecting a mortgage provider; this could be a direct approach to banks in Dubai, or you might prefer the assistance of a broker. A broker’s expertise in navigating the mortgage landscape can be invaluable, especially in identifying the most favourable deals, allowing you to focus on finding the right property.

2. Select the Right Mortgage

The Dubai property market offers a variety of mortgage types, mainly split into fixed-rate and variable-rate options. Critical considerations include:
• Your lifestyle
• The type of property you’re interested in
• The amount of loan you need
• The size of the deposit you can manage

3. Obtain a Pre-Approval

A pivotal part of the application process is obtaining a pre-approval from a bank. This document is an official indication of your eligibility for a mortgage and outlines your maximum borrowing limit. Obtaining a pre-approval takes a few working days and is a key budgeting tool in your property search.

4. Find Your Property

When you have a pre-approval, you can then proceed to find your ideal property. The validity of a pre-approval typically spans 60 to 90 days, affording you ample time for your search. We recommend securing pre-approval before starting your property hunt to ensure you have the necessary financial backing.

5. Finalise the Property Purchase

After selecting a property, the next step is to inform your bank to finalise the loan agreement. Here you will notice the differences between buying a property in cash vs a mortgage; banks often conduct a valuation of the property to determine its worth, assisting you in making a well-informed offer.  Upon reaching an agreement on the price with the seller and paying the deposit, you’ll set a date for completing the transaction. On the completion date, the bank releases the loan amount to the seller, culminating in your property acquisition.

How Much Time Does it Take to Get the Mortgage?

Navigating the mortgage process in Dubai is efficient and accessible, typically taking about two weeks to secure your final mortgage offer. This quick turnaround is a significant advantage for expatriates and international investors looking to tap into Dubai’s dynamic property market.