Frequently Asked Questions

We've tried address the common questions pertaining to buying a home and getting a home loan. But of course, we're always learning. So if there's a question you have that we haven't already answered here, just click on the button below and ask.

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Mortgages

What is the maximum tenure I can apply for?

The longest borrowing period for a mortgage in the UAE is 25 years.

How much will the bank lend for a mortgage?

The exact amount any bank will lend depends upon three key factors:

income
age
any other liabilities one has at the time of applying for the mortgage

Based on these, the bank will calculate the applicant's Debt Service Ratio (DSR). It is also known as Debt Burden Ration (DBR). It is one's ability to pay back the borrowed amount.

What is the loan-to-value (LTV) I can expect?

For expats buying their first property: For a property that costs less than AED 5 million, the maximum LTV an expat can expect to obtain is 80%. For a property worth more than AED 5 million, the maximum LTV they are eligible for is 70%.

For UAE nationals buying their first property: For buying a (first) property that costs less than AED 5 million, a UAE national obtain a maximum LTV of 85%. For a property worth more than AED 5 million, the maximum LTV they are eligible for is 75%.

What is a mortgage pre-approval?

It’s the amount of money a bank estimates the applicant is eligible to borrow based on reviewing the mortgage application. The bank issues a letter to the applicant, stating the LTV and the amount they are willing to lend to that applicant.

This pre-approval is usually valid for a period of 30 to 60 days. The duration depends on the bank. Some banks offer a 90-day validity.

The pre-approval is renewable, but there is a fee associated with the renewal.

How long does it take to get a pre-approval?

Typically, getting a pre-approval takes 5-6 working days. However, the duration may vary, depending on the bank and on your specific circumstances.

What documents do I need to apply for a mortgage?

The standard set of documents for the average salaried resident are:

Passport and visa copy
Emirates ID copy
Salary certificate addressed to the bank
Bank statement and payslips of the last six months
Most recent credit card statement (if any)
Proof of residence (copy of Ejari, tenancy agreement or utility bill)

However, on an ad hoc basis, a lending bank may request for additional documents.

Can self-employed people get a mortgage in the UAE?

Yes, self-employed individuals are eligible for a mortgage. Some banks may have a preference for salaried applicants. But most banks offer mortgages to self-employed professionals.

The Mortgage Boutique will greatly reduce the time and effort for a self-employed applicant by quickly shortlisting banks that will provide them with home finance options.

What kind of mortgage products are offered in the UAE?

Banks in the UAE offer several different home finance products:

Residential mortgage
Non-resident mortgage
Investment mortgage (buy to rent)
Commercial mortgage
Capital & profit/interest mortgage
Offset mortgage
Variable and fixed-rate mortgage
Land and construction mortgage

Is it possible to settle a mortgage earlier than its tenure?

Yes, it is possible to pay off the mortgage sooner. In accordance with UAE Central Bank's regulations, the lending bank will impose a penalty of 1% of the remaining balance or AED 10,000; whichever is lower.

Most banks make allow borrowers to over-pay a certain percentage without penalty each year. So a borrower can pay a certain percentage more than the calculated repayment amount. The exact percentage of how much excess is allowed varies for each bank. That way, they can settle the loan earlier than the agreed tenure with minimal or zero penalty.

However, a penalty – the lower of 1% or AED 10,000 – will be imposed by most banks if the borrower exceeds that annual allowance.

Can the upfront costs be incorporated into the mortgage?

It is possible to incorporate some of the upfront costs (e.g. agency commissions, transfer fees and so on) into the home loan amount. Some banks offer the option of including many of the upfront costs. Which ones and how much is at each bank's discretion, and may vary for each individual applicant..

What if the bank values the property at less than its current selling price?

The bank will calculate the mortgage LTV based on the price determined by the valuation team. If that figure is below the selling price, then the difference will have to be paid by the buyer as part of the down payment.

Is getting a life insurance mandatory for a mortgage?

Yes, life insurance is mandatory for home finance. Most banks will offer a life insurance as part of their proposal. Most banks will accept life insurance from the borrower's preferred insurance company.

Why does the bank ask for a security cheque?

The bank requests a security cheque as a means of protecting itself in case the borrower defaults on their mortgage repayments. If the borrower fails to pay, the bank can deposit the cheque to try and recover their funds.

If the security cheque bounces, the bank will be able to initiate legal action to take possession of the property in order to recover the outstanding debt.

Is it possible to get a mortgage to buy an off-plan property?

Yes, it is possible. It is important to know that:

The maximum LTV is 50% for off-plan properties.
Banks will only finance the second 50% of the payment; not for the first 50%.

The borrower must pay the first 50% of the property value by themselves; whether it is according to the developer's payment plan or by paying the entire (50%) amount as a single payment.

Real Estate

What are the upfront costs for buying a property?

To buy a property in Dubai, these are the upfront payments one should expect:

Real Estate Agent fee – 2% of the property price
Transfer fee – 4% of the purchased price plus AED 580
Bank processing fee – varies for each bank, but usually up to 1% of the amount borrowed
Trustee fee – AED 4,000 (for properties above AED 500,000)
Mortgage registration fee – 0.25% of the borrowed amount plus AED 290
Valuation fee – varies for each bank, but typically AED 2500 – 3500 + 5% VAT

The costs may vary for buying a property in other Emirates.

What is an MOU?

In the Emirate of Dubai, the MOU (Memorandum of Understanding) is also referred to as the Real Estate Regulatory Agency’s (RERA) Form F. It is a document that serves as a unified purchase agreement between the buyer and the seller. It states all the necessary terms and conditions agreed upon by both parties.

It is prepared by the real estate agent once the buyer has chosen the property and a price has been decided between the two parties. Both parties are required to sign it. Once signed, it is registered at the Dubai Land Department.

If the buyer fails to secure a mortgage, the deal will be considered null and void without penalty. Otherwise, neither party may back out without penalty.

Does a buyer have to get a mortgage pre-approval before agreeing on a price with the seller?

No, the buyer and the seller may agree on a price and sign either RERA's Form F (the official MOU) or sign a separate Memorandum of Understanding (MOU) and get int duly notarised.

It is always advisable to get a mortgage pre-approval before looking for a property because the pre-approval provides a useful estimate of the price range within which a buyer should look for properties.