Dubai is a popular destination for expats who want to enjoy a luxurious lifestyle and pursue various opportunities. Buying a property in Dubai can be a smart investment, but it also requires a lot of planning and preparation. If you are an expat who needs a mortgage to finance your property purchase, you may wonder how to secure a mortgage in Dubai and what are the steps involved. In this article, we will share six tips that can help you get a mortgage in Dubai as an expat.
What is mortgage?
A mortgage is a loan used to finance the acquisition of real estate, be it a home or a business. In a mortgage, the mortgagor promises to pay back the loan plus interest at a later date. The lender (sometimes called the mortgagee) receives a security interest in the property as collateral for the loan, giving the lender the right to foreclose on the property and sell it to recoup the debt if the borrower defaults on the loan. Financial entities such as banks and credit unions offer mortgage loans. Both the lender and the borrower’s creditworthiness will determine the loan’s interest rate and other terms and conditions, such as the repayment schedule.
What are the tips for getting mortage for expats easily?
- Research for a lender
The first tip is to research and find a lender who can offer you a suitable mortgage product. Lenders in Dubai are mainly banks that must be registered with the Dubai Land Department (DLD). You can either approach the banks directly or hire a mortgage broker who can assist you with the process. A mortgage broker can help you compare different mortgage options, prepare the required documents, and negotiate with the banks on your behalf. They can also save you time and hassle by handling all the paperwork and communication with the third parties.
- Prepare the down payment
The second tip is to prepare the down payment that you need to pay upfront when buying a property in Dubai. As an expat, you will need to pay at least 20% of the property price as a down payment, while the remaining 80% can be borrowed from the bank. This means that you will need to have enough savings or earnings to cover the 20% down payment, or borrow it from friends or family. Unlike in some other countries, where you may be able to borrow up to 95% of the property price from the bank, in Dubai the maximum loan-to-value (LTV) ratio for expats is 80%.
- Choose the best mortgage
The third tip is to choose the best mortgage that suits your needs and preferences. There are mainly two types of mortgages in Dubai: fixed rate and variable rate. A fixed rate mortgage means that your interest rate and monthly payments will remain constant throughout the loan term, while a variable rate mortgage means that your interest rate and monthly payments will fluctuate according to market conditions. The choice between the two depends on various factors, such as your income stability, risk appetite, loan amount, property type, and cash flow. You can use an online mortgage calculator to estimate your monthly payments and compare different mortgage options.
- Prepare the documents
The fourth tip is to prepare the documents that you need to submit to the bank when applying for a mortgage in Dubai. The documents may vary depending on the bank and your employment status, but generally they include:
– Passport
– Emirates ID
– Visa copy
– Salary certificate or trade license (for self-employed)
– Bank statements
– Credit report
The documents should be clear, accurate, and error-free. They should also be submitted in advance to avoid any delays or rejections. The bank will use these documents to verify your identity, income, credit history, and financial commitments.
- Analyze your finances
The fifth tip is to analyze your finances and make sure that you can afford to repay the mortgage without any difficulties. The bank will check your credit score, which is a measure of your creditworthiness and repayment history. You can obtain your credit report from the Al Etihad Credit Bureau, which holds this information in the UAE. You should aim to have a healthy credit score, which means that you have no outstanding debts, bounced cheques, or bankruptcy records.
The bank will also check your debt-to-income (DTI) ratio, which is the percentage of your income that goes towards paying your debts and other financial obligations. The lower your DTI ratio, the higher your borrowing power and chances of getting approved for a mortgage. You should try to reduce your debts and expenses as much as possible before applying for a mortgage.
- Consider the fees and tenure
The sixth tip is to consider the fees and tenure that are associated with getting a mortgage in Dubai. There are various fees that you may have to pay when buying a property and getting a mortgage in Dubai.
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Conclusion:- After reading this post you will get tips for getting a mortgage and the tips are understood easily.