How to get a home loan in Dubai
While cash purchases remain common in Dubai, mortgage borrowing is on the rise and is a significant part of recent property investments. According to the Central Bank of the United Arab Emirates, home loans accounted for 15% of real estate investments in 2018 (for properties above AED 10 million).
Obtaining a home loan in Dubai is relatively easy for UAE nationals, resident expats and non-resident foreign investors in Dubai. In principle, banks require valid identification and proof of income, whether wages, self-employment income or assets. An agreement in principle can be obtained within 3 or 4 days, with an additional week for the final loan agreement.
Applicants should obtain an agreement in principle before starting their search for a property to determine if there are any restrictions on their budget, and especially before paying a deposit.
Most major banks in Dubai offer home loans, leaving applicants spoiled for choice. Each bank has its own conditions and it is important to know that the interest rates are updated regularly according to the rates of the EIBOR (Emirates Interbank Offered Rate). The dirham is pegged to the US dollar, and local interest rates in Dubai change according to changes the US Federal Reserve makes to its interest rates.
Thus, future owners will find themselves sandwiched between an attractive property price and fluctuating interest rates, and it will be necessary to study the best way to structure repayments. Applicants can also enlist the services of expert advisors to determine the best loan and rates for their needs.
If the applicant goes through an advisor or works directly with a bank, negotiation is essential because real estate loans are set up on a case-by-case basis in Dubai.
