Looking for Better Mortgage rates in UAE?
In fact, this blog helps you find the same.
You will find some of the best mortgage rates in UAE, and it is also a reason why it attracts many expats each year.
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For the average person here in the UAE, owning a house is a legitimate reality. This is possible due to the availability of low mortgage rates.
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A mortgage is a legal agreement, which allows a bank to lend the debtor money in exchange for the deeds to the property.
In the UAE, there is a multitude of banks that offer the best mortgage rates to both expatriates and nationals.
Related: Mortgage Calculator in UAE
Compare Mortgage rates UAE for January 2024
Here is a list of some of the most financially advantageous ones and how they will benefit you:
| BANK | RATE OF INTEREST (Starting from) | MINIMUM SALARY | LOAN AMOUNT (MAX) |
|---|---|---|---|
| Standard Chartered Mortgage One | 3.4% (reducing) | 15000 AED | 18 Million AED |
| RAKBANK Home in One | 2.69% (reducing) | 15000 AED | 20 Million AED |
| CBD Mortgage Loan for Expats | 2.39% (reducing) | 15000 AED (Salaried people); 20000 AED (Self-employed) | 10 Million AED |
| Emirates NBD Home Loan for Expats | 3.29% (reducing) | 15000 AED | 15 Million AED |
| Standard Chartered Home Suite | 2.99% (reducing) | 15000 AED | 18 Million AED |
| ADIB Home Finance for Expats | 3.49% | 15000 AED | 15 Million AED |
- Standard Chartered Mortgage One:
Standard Chartered is one of the most well-renowned banks in the world and comes with an assurance of the best available rates and features.
Under their Mortgage One scheme, the reducing rate is around 3.49%, and the fixed rate is 2%.
The fixed rate is somewhat fluctuating over the course of around 25 years, which is the maximum term, but it will always hover around the 2% mark.
The advantage of taking up this loan is that the tenure of the loan will be shorter as the majority of the payment goes towards the principal and not the interest.
There is, however, a minimum salary requirement of 10000 AED. The down payment can be around 20% of the property price, and the bank offers up to 18 million AED.
For those of you looking for property in and around Abu Dhabi, Dubai, and Ras Al Khaimah; this should be your first choice.
   Click Here to Apply For Standard Chartered Mortgage One
2. RAKBANK Home in One:
RAKBANK Home in One offers a combination of a current account holding and a home finance.
The interest on the loan is calculated on a daily basis, and you can withdraw your money at any time.
The reducing rate is 3.24%, and this can fluctuate over the course of the repayment period.
The minimum salary requirement is 15000 AED, and there is virtually no cap on the amount you can take.
The mortgage can be taken out for a maximum time period of 25 years, and you can purchase any property in Dubai, Abu Dhabi, and RAK.
The only condition is that the property needs to be ready, and you can only purchase under construction property in Dubai.
       Click here to Apply for RAKBANK Home in One
3.Emirates Islamic Manzili Home Finance:
Emirates Islamic bank offers one of the lowest mortgage rates, with a fixed rate of just 1.81%, which is adjusted for 25 years.The reducing rate is around 3.2% per annum.
There is also a minimum salary requirement of just over 15000 AED. You also get a credit card when you take this mortgage option and a 2-month installment deferment. You also have to be a salaried employee for just over 6 months to choose this mortgage.
You can get up to 20 million AED in the mortgage, which will have to be paid over the course of 25 years. This offering also comes with a two month deferment period, which is good and can be availed every year.
   Click Here to Apply for Emirates Islamic Manzili Home Finance
4. CBD Mortgage Loan for Expats:
If you are an expatriate looking for the best mortgage loans that will help you buy the house you have been dreaming for, this is it.
The CBD offering is a very lucrative one.
The extremely low fixed rate of just 2.1% over 25 years and the reducing rate of 2.99% per annum are all good for any expatriate looking to put down their roots.
There is a requirement of 12000 AED minimum for salaried individuals and 20000 AED for self-employed people.
You can take up to 10 million AED, which is enough to land you a fantastic place.
The only qualm is that this mortgage is available if the project is already complete.
If you have been waiting this long to buy a house, this option is by far the most cost-effective.
      Click Here to Apply for CBD Mortgage Loan for Expats
5. United Arab Bank Home Finance for UAE National:
If you are an Emirati national and are looking for the most effective mortgage, this home finance from UAB is the way to go.
With a lowly 1.69% fixed rate per 25 years and a 2.99% reducing rate; for any of you looking to get a brand new villa or put down a real estate investment, this option is the one.
However, you need to have a minimum salary of 15000 AED, and those who are self-employed, the requirement is a steep 50000 AED.
You can get up to 10 million AED and purchase any property with a title deed in Emirates. Such flexibility allows you to invest in the widest range of options and where you feel is going to pay off big dividends.
You also get a pre-approved credit card when you take upon the mortgage option.
Click Here to Apply for United Arab Bank Home Finance for UAE National
What Is Included In The Mortgage Payments?
When you take a mortgage, you will be paying the following –
- Interest
The interest is denoted as the monthly percentage, which is added to every mortgage payment. Banks and lenders would be certainly expecting something in return when they let you borrow money. And interest is their way of making a profit from your loan.
- Principal
It is the overall amount of the loan you have been provided with. For instance, if you have taken a mortgage of AED 250,000 to buy a property in Dubai, then that’s your principal amount. Typically, lenders will require you to make a down payment of 20% at the time of purchase. So if the AED 250,000 represents 80% of the value of the house, then $62,500 will be the down payment, and the overall purchase price will be $312,500.
- Insurance
Mortgage payment also encompasses insurance which requires the lender to cover any damages to the house and the property within it. Moreover, it may also include the borrower making less than 20% as a down payment for the cost of the house. Mortgage insurance is designed to protect the bank or lender in case the borrower is at default on a loan.
- Taxes
There is no property tax in Dubai, but you will have to pay 5% on the average rental value in the particular areas. Moreover, you will also have to pay certain fees to the Dubai Land Department while transferring the property. And, you will also have to pay a monthly housing fee or municipality tax.
What Are The Types Of Mortgage Available in UAE And Dubai?
Financial lenders in Dubai and UAE offer a wide range of mortgage types based on your property and financial requirements. Following are the mortgage options that you can acquire in UAE and Dubai –
- Fixed-Rate Mortgage
In this type of mortgage, the interest rate is determined in advance prior to the loan term starts. And the rate of interest remains the same throughout the tenure of the loan. The specific mortgage type is generally offered for two to three years.
In some cases, you may get to enjoy a fixed interest rate for the entire loan tenure. The primary benefit of this type of mortgage is that you can be clear about your budget from the get-go. And, even if the rate of mortgage increases in the future, it will not affect the borrower as they have a fixed rate of interest.
- Variable-Rate Mortgage
Contrary to fixed-rate mortgages, the interest rate in the variable mortgage is vulnerable to change across the tenure of the loan. In this type of loan, the interest rate depends on various market factors. It can be beneficial for borrowers if the rate of interest in the market stabilizes or decreases. To avail of this kind of mortgage, the borrower should have good financial stability to deal with fluctuations in the market.
- Remortgage
Borrowers take this kind of loan on an existing mortgage or transfer an existing mortgage to a new lender. A remortgage loan is also reckoned as a balance transfer that can be either availed with the same lender or a different lender. You can opt for a remortgage if the other lender is offering a low rate of interest or if you need additional funds.
- Capped Mortgage
Variable mortgage rates are slightly lowered in comparison to a fixed-rate mortgage. However, variable rates are extremely unpredictable as they can rise and fall at any time. This vitality can put the borrower under a lot of stress.
To make things better, financial institutions offer an interesting option known as capped mortgage. A maximum cap is determined, and if the rate of Eibor rises, the monthly installment will not go over the predetermined cap.
The capped mortgage is valid only for a particular time period and generally extended as an introductory offer.
- Offset Mortgage
It is a rather new time of the mortgage option in the UAE, and not a lot of lenders offer it presently. In this type of loan, the borrowers can link their saving account, credit card account, current account, and loan account. Whenever funds get credited to any of the linked accounts, the loan amount will be reduced by the credited amount.
Who Is Qualified To Get Mortgage In Dubai?
Whether you want to buy a townhouse, villa, or apartment in Dubai, there are easy ways to secure a loan; granted you fulfill the eligibility criteria. Following are the eligibility criteria to avail mortgage in Dubai –
- Individual must be aged between 21 and 65
- He or she must be UAE national or resident
- Individual must have a monthly income of at least AED 10,000 (salaried) whereas AED 25,000 (self-employed)
Although there are banks that allow UAE nationals to apply for a mortgage with a minimum salary of AED 8K, it depends on the policies of the bank.
The eligibility criteria for expats are slightly different from the UAE nationals. Expats must have a minimum salary of AED 10,000. Moreover, expats have to make a down payment of 25% on the property valued at AED 5 million or under, whereas 35% on properties valued above AED 5 million.
What Are The Documents You Need To Submit For Mortgage In UAE?
If you have decided to buy a property in Dubai through a mortgage, you need to first apply for the same. Every bank has a set of paperwork that you need to fulfill to process your mortgage application.
The paperwork requirements different from one bank to another but generally following are the documents that you need to apply for a mortgage in Dubai –
- A copy of Emirates ID
- A copy of passport and visa
- A salary certificate for employment proof
- Residential proof
- Bank statements and payslips for the last six months
- Latest statements for your credit cards
Steps-By-Step Process Of Getting A Mortgage In Dubai
Following are the steps you need to follow to get a mortgage to purchase your home –
- Find The Right Lender –
In Dubai, you get a mortgage from banks that are registered with the Dubai Land Department (DLD). You can directly contact the bank with their marketed mortgage deals. Moreover, you can also hire a broker to do the work on your behalf.
Brokers have invaluable knowledge and insight into the available home loans and local market to better guide you. This enables you to focus your efforts more on finding the right property rather than juggling the paperwork and the mortgage process.
- Select A Suitable Mortgage –
Dubai banks offer various types of mortgages that primarily fall under fixed-rate mortgages and variable-rate mortgages. When it comes to choosing the right mortgage, you have to consider the following factors –
- The property type
- Your lifestyle
- The required loan amount
- The down payment you can manage
Generally, banks have a mortgage calculator available online that allows you to insert variables and get an estimate of the monthly installment that you will be paying under the specific interest rate.
- Acquire The Pre-Approval Letter
This is among the most critical parts of the overall application process. An approval letter is an official letter issued by the bank that certifies your eligibility to get housing finances. It highlights the maximum borrowing limit that you can get and provides certainty of acquiring a mortgage. Generally, it takes three to five business days to get the pre-approval home loan letter from the bank.
- Decide Your Property
Once you have received the pre-approval letter and decided on a budget, you can look for the perfect property in Dubai. The letter is valid between 60 and 90 days, depending on the bank, so you have sufficient time to look for the property that you want to buy.
Sometimes people first look for property and then apply for a loan. A problem with this approach is that then you may not be able to secure the entire amount to finance the property. Once you know how much amount you will be getting, you can buy a property that stays within your budget.
- Finalize The Purchase
Once you have found the property, you can liaise with the bank to finalize the mortgage agreement. Before that, the bank will appoint a property evaluator to assess the market value of your property and assist you in making a good offer on the same.
Once you and the seller have agreed upon a price, you can proceed to pay the deposit and decide the date to finalize the transaction. And on that date, the bank will release the predetermined amount to the seller and make you the owner of the property.
Typically, the entire process takes around 7 to 10 business days, depending on the lender.
What Are The Fees Associated With Getting Mortgage In Dubai?
Applying for a mortgage in Dubai implies that you have to pay certain fees such as legal costs, administrative fees, etc. The exact fees that you will need to pay will vary based on the circumstances, but the overall following is the fee breakup that you should be prepared for –
- Bank’s fees include processing fees, insurance registration fees, and property valuation fees.
- Mortgage registration fees total 0.25% of the value of your approved mortgage.
- Loan protection insurance or mortgage life insurance. It is compulsory to get the cost will vary based on the type of property and mortgage.
Based on the situation, you may find yourself dealing with other costs both in terms of costs for arranging the loan and costs related to taxes. However, the major investment will be the cost you have to deposit to secure the loan as well as the sale.
Moreover, if you are investing in off-plan property, this cost would come around 50% of the overall cost. And in case your bank account is in a foreign land, then you have to send yourself money to pay the incidental costs and fees. This means that you will have to bear fees charged for international money transfers.
Final Thoughts
As you can see, the choices are endless. This gives you tremendous freedom in choosing the best option, one which will suit your long-term plans as well as your family’s plans.
The UAE is a thriving place where the standard of living seems to shoot up each year.
If you have been in the country for a long time or you are a native, getting a house right now would be a very prudent investment.
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