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Mortgage financing in Dubai, UAE

Mortgage financing in Dubai, UAE – banks in UAE, providing quite actively the mortgage financing  in UAE before the crisis, and noticeably decreasing the volumes of mortgages at the time of the crisis, started lately to actively provide mortgage financing again.

As a rule, the main criteria to receive the mortgage financing for a physical person in AAE are the UAE residency visa, employment contract  / salary certificate with the required salary level which shall be sufficient to cover the mortgage payments and the bank statement for last 6 or 12 month.

For legal entities one of the core documents would be the company’s balance for last 2 or 3 years and the company account statements. Another important factor for the bank would be the type of the business of the company and the steadiness of the company profit received.

In case of a mortgage for a physical person as well as of a mortgage for a legal entity the important factor for the mortgage would be bank’s evaluation of the property market value. This is the reason why, quite often, it is easier to receive the mortgage financing for the property of the large developer which is known to the bank by its construction quality rather than for a property built by a small and unknown developer. It is also important to outline that the mortgage financing is provided mostly to the fully completed properties or the properties nearing the completion. Average mortgage loan rate  in UAE ranges from 5,5% to 7% per annum.

Below is the list of some of the banks in UAE providing mortgage financing:

  • Abu Dhabi Commercial Bank (ADCB)
  • Amlak
  • Barclays
  • Dubai Islamic Bank
  • Emirates NBD
  • Emirates Islamic Bank
  • HSBC
  • Noor Islamic Bank
  • RAK Bank

It is worth to consider that in order to approve your mortgage financing request the UAE banks would need on average around 1 month, sometimes even longer and, within the time the bank evaluates  your application, your target property may be already sold. Thus, in case of a purchase of a property using the mortgage loan it makes sense to approach the bank in advance, get from the bank the preliminary and general ok from the bank to provide you a mortgage. In such a case the time to receive the mortgage, once you find the suitable property, would be shorter.

Practically all banks in UAE finance not more that 70%, sometimes up to 80% of the value of the property in UAE, purchased by the foreigners with the mortgage loan term of 15 to 20 years. This is the reason why banks in UAE do not provide mortgage financing to the persons older than 50 years old or provide it to much shorter time period.

For some properties in UAE developers offer the arrangement of payment for the property on the base of installments or over the solution „rent and buy“, means that part of the rental payments would be subtracted from the final mortgage amount due. Even though such solution is quite of an advantage, it is normally offered for the properties being located in the areas being not the best one in Dubai or, if such solution is offered in a good district, it is often given whether to the building being on the earlier phase of construction or under the terms which are noticeably higher than the current mortgage rates.

 

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