Things to Know about Taking out a Mortgage in Dubai
Whether you are searching for apartments or villas for sale in Dubai, most likely you have already seen that properties can be slightly more expensive than in many other parts of the world. To deal with this, many potential buyers prefer to take out a mortgage.
If you also want to take out a mortgage, this post is for you. Here, you will get all the important information related to mortgages available in Dubai.
Understanding Different Types of Mortgages Available In Dubai
In Dubai, you can choose from different types of mortgages as per your preferences and requirements. Here are brief overviews of each of them. Regardless of the type you choose, be sure to read the terms and conditions thoroughly before finalizing anything.
Although the duration for this type of mortgage can be one to five years, most homebuyers prefer to take it out for five years. At the end of your chosen duration, the fixed rate becomes the variable rate of your bank. One benefit of taking out a fixed-rate mortgage is that you can predict your total repayment amount for a particular period of time.
Variable Rate Mortgage
The fluctuations in a variable rate mortgage depend on the EIBOR (Emirates Interbank Offered Rate). With fluctuations in rate, your repayment amount will vary as well. If you think that the interest rate will go down, considering a variable rate mortgage may prove to be advantageous for you.
With some lenders, you may get the choice of taking out an offset mortgage. Here, your house loan will be linked to a current or savings account. Any cash amount in this current or savings account will lower the interest rate of your loan. This will be based on the difference between your balances and your loan.
Discounted Rate Mortgage
In this type of mortgage, you will get a percentage discount from the lender for a pre-specified period of time. It is important to note that the discount will only be valid for that predetermined period of time.
Here, you transfer your existing house mortgage to another lender. This often leads to the release of build-up equity or obtaining a lower interest rate. villas for sale in Dubai
Mortgages for Foreign Buyers and UAE Nationals
Both foreign buyers and UAE nationals can take out mortgages to fund their home purchases. However, the amount which can be borrowed will be slightly different.
Mortgage for Foreign Buyers
- If the maximum value of your property is five million, your maximum mortgage amount will be 75% of its total value.
- If the value of your property is more than five million, your maximum mortgage amount will be 65% of its total value.
- If you buy an investment or second property, your maximum mortgage amount will be 60% of its total value.
Mortgage for UAE Nationals
- If the maximum value of your property is five million, your maximum mortgage amount will be 80% of its total value.
- If the value of your property is more than five million, your maximum mortgage amount will be 70% of its total value.
- If you buy an investment or second property, your maximum mortgage amount will be 65% of its total value.
It is important to note that when it comes to purchasing an off-plan property, the maximum mortgage amount will remain the same for both foreign buyers and UAE Nationals. And this will be 50% of the property value.
Comprehending the Factors That Will Determine Whether Or Not You Are Eligible For A Mortgage
As with any other part of the world, there are some eligibility criteria for taking out a mortgage in Dubai also.
Here are the factors that you need to keep in mind.
- You need to be employed and earn a monthly amount.
- You should have been in the present job for more than six months or a year. This will depend on the rules of your lender and the location you are going to purchase the property.
- In case you are self-employed, you should have been running the business for a minimum tenure of two years.
- Your credit history needs to be clean and with a good credit score.
- Your general living expenses and lifestyle factors.
- The value of the property that you are going to purchase.
- The maximum loan term is 25 years. If you are a salaried person, your maximum age limit for taking out a mortgage will be 60 years. And if you are a self-employed person, your maximum age limit will be 70 years.
When it comes to taking out a mortgage, you must make a down payment. You should always try to make a higher down payment as this will lower your total repayment amount. No matter if you are searching for apartments or city walk apartments for rent, a higher down payment should help you save a significant amount of money to deal with any unforeseen circumstances.