Mortgages for Expats in the United Arab Emirates

Author: Jim Newham
Submitted: March 2014

As in most countries, lending in the UAE has become more circumspect since the credit crunch. This involved prices in falling to more realistic levels, e.g. in Dubai to about half of what they were. Prices are now on the rise again; a 15%-20% increase is expected for 2014. As rented accommodation is rising even more quickly in some areas, increasing numbers of expats are taking out mortgages to buy a home.



For any down payment, the lender will want to see bank statements that prove that the entire amount has come from your own money. The maximum repayment period is 25 years, though several lenders only offer 15 or 20 years. The maximum full term age is 65. Mortgage repayments must not exceed 50% of monthly income (this restriction is quite generous compared to similar ones in other countries.) Furthermore, the total amount of mortgage repayments must not be greater than seven years’ wages.



Concerned by the overheating property market, the UAE Central Bank introduced several restrictions on mortgage lending in December 2013. The most important limitations were mortgage caps. For properties with a value below AED5m (US$1.35m approx., Expats buying their first property can now obtain a maximum loan-to-value ratio (LTV) of 75%. For more expensive properties, the LTV drops to 65%; for those buying to let or buying a second home, the LTV falls to 60%. All off-plan properties – which have been a popular choice among expats – are limited to a 50% LTV.

Early repayment penalties are normally in operation, and can be as much as 5%. On the other hand, your lender may agree to allow you a one-month payment holiday per year. Note that, under Islamic law, lenders are required to be up-front about any charges and penalties that you may incur.


Mortgage types

There are over 50 different mortgage products on the market. First, there are the usual options for capital plus interest repayment or interest only. The latter is not very popular as it is restricted to investment properties only, and the maximum interest-only period is five years.

In addition to many other products, both fixed rate and variable rate mortgages are available. The average variable mortgage rate is rather higher than the Western average, at around 7%. Fixed rate mortgages are shorter, generally having a full term of five to fifteen years.



It is a good idea to get a mortgage pre-approved before you start looking for property. You then have 90 days to find a suitable property. In addition to a completed mortgage application form, documents you need to apply for a mortgage typically include:

Gaining approval for your mortgage is influenced by factors such as your time of residence in the UAE and your income level and debts. Note that if you want to borrow as a couple and you are not married, you may need to take some time to shop around.



Arrangement fee and mortgage processing fee are both typically around 1%. There is also a mortgage registration fee, and life insurance is mandatory (a typical rate is 0.4% of the outstanding loan per annum. Conveyancing fees and broker’s fees may also be payable. Note also that if you choose to remortgage, you may be subject to a transfer fee of up to 5%.



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