Getting a mortgage in the UAE is easy if you have done your research beforehand. You need to be between 21 and 65 years if you are an expat working in the UAE. For self-employed individuals the age is extended to 70 years. Non-residents can also secure a mortgage in the UAE, provided they meet all the requirements set by the banking institution.
Get Your Credit Score
Your credit score is the first thing you should consider when thinking about applying for a loan. The score gives an indication to the banks like First Abu Dhabi Bank, Dubai Islamic Bank, Ras Al Khaimah Bank, Emirates NBD etc., that you have the financial strength to repay the mortgage amount. While the credit score in the UAE ranges from 300 to 700, the ideal credit score is 700 and above.
If your credit score is below 700, you can still increase the score by paying your outstanding bills on time and repaying any previous loans. To get your credit report in email just login to the Al Etihad Credit Bureau (AECB) website, pay the fees Dhs. 84 for individuals or Dhs. 157.5 for companies. Alternately, visit the AECB office in person to get the report, but expect to pay Dhs. 105 for individuals or Dhs. 189 for companies.
Prepare the Documents
While most people prefer getting the mortgage from the same bank they use for other financial needs, it is smarter to shop around. Some banks set a lower mortgage rate due to some promotion or tie-ins with certain real estate developers. The number of document requirements also can differ at the bank’s discretion.
Generally, you need documents like:
- Copy of your passport
- Copy of your Emirates ID
- Salary certificate for salaried individuals
- Trade license for self-employed individuals
- Proof of residence like DEWA bill, tenancy contract etc.
- Salary or Income slips
- Bank statements for the past six months
- Latest credit card statements
Choose your Mortgage Rate Type
Mortgages usually come as either fixed rates or variable rates. In some circumstances, a fixed rate provides better protection in case there is any increment in the base rate. Like recently, the Central Bank of the UAE (CBUAE) hiked up the rates, impacting both the mortgage loans and the high-end properties in the UAE.
The variable rate keeps changing, depending on your set duration like per day, per week, per month etc. This may be a better option when instead of increasing the rates, CBUAE decreases the rates. Since your mortgage rate isn’t fixed, you get the chance to avail the new lower rates.
Bank Terms for Loan Application
While every bank has set their own set of rules for the mortgage loan, there are a few commonalities like:
- Minimum for a salaried individual is Dhs. 15,000
- Minimum for a self-employed individual is Dhs. 25,000
- Maximum repayment period is 25 years
- Mortgage rate can start from 2.49%
- Get finance for 60 to 85% of the purchase price
Getting a mortgage in the UAE is easy if you have your documents ready. Most banks take about two weeks to approve or reject the application. It is advisable to keep track of your credit score well before applying. A poor credit score increases your perceived risk factor which leads to a higher interest rate.