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The answer is a resounding yes: foreigners can secure a mortgage in Dubai; this opens up a world of opportunities for those dreaming of living in a dynamic city. Especially if they want to settle down or if an investor is eyeing the lucrative real estate market. Here is a complete guide that helps you know more about house foreigners’ loans in Dubai and answers your questions about the process.
Foreigners Mortgage Types in Dubai
Navigating the real estate market in Dubai as a foreigner involves understanding the various mortgage options available. Here are small briefs for each type:-
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.
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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.
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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.
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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.
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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.
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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.
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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.
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Non-Resident Mortgage
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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.
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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.
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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. -
Valid Passport
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Bank Statements
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Tax Returns
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Salary Certificates/Payslips
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Trade License and Audited Financial Statements
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Details of Existing Loans
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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.
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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
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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.
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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.
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Finalise the Property Purchase