What are the Different Types of Mortgages Available to UAE Residents?


The UAE is prime for choice properties. Whether you are a first-time homeowner or a seasoned property investor, there is always some innovative property to discover. The recent flux of Golden Visa expats flocking to the region is raising the bar on the type of properties available. UAE banks are also upping their game, introducing several attractive mortgage plans. 

With options being aplenty, you need a guiding hand to traverse the various home loans available for residents in the UAE market. 

Variable vs. Fixed Interest Rates 

Available to both the UAE Nationals and the expat population, the main attraction of variable mortgages is that the interest rate isn’t fixed. This gives you ample opportunities to take advantage when the government cuts interest rates. However, there is a chance that the interest rates might increase, which can put you at a disadvantage.  

Prudent buyers often prefer a fixed interest rate as it helps avoid sudden increases in loan rates. In the UAE, you can get a loan from any of the leading banks like HSBC, RAK Bank, First Abu Dhabi Bank, and Mashreq Bank. Fixed interest rate mortgages usually last for 5 years after which the interest rates shift to a variable.

Mortgage for Sustainable Properties 

Sustainable developmental properties are cropping up in the UAE. Masdar City in Abu Dhabi started the trend by showcasing a self-sufficient, pedestrian-friendly community. Similarly, “green” home loans also entered the UAE banking system.  

The “Green Mortgage” from the First Abu Dhabi bank is designed for environment-conscious property buyers. Your property just needs to have a recognized certification to be eligible. Look out for an Estidama ration, WELL Building Standard, or the Global Sustainability Assessment System (GSAS) certification. 

New vs. Off Plan vs. Resell 

The Central Bank has placed certain restrictions on banks and financial institutions that lend money. For projects that are completed, you can get anywhere from 80% for UAE Nationals to 75% for expats. However, if your property is off plan or incomplete, you can only get a loan for 50% of the property price.  

Dubai Islamic Bank offers mortgages for under-construction freehold properties. You need the initial down payment of 20% for UAE Nationals and 25% for expats. The rest of the amount can be offset via a loan. 

Buying a Plot of Land 

One of the latest initiatives in the UAE property market is the eligibility to buy land in the UAE with the intention of investing or building your home. As only the UAE Nationals were legally allowed to buy land previously, there are many mortgage schemes from leading UAE banks. Usually, the scheme lends money for land ownership to UAE nationals that come under the Mohammed Bin Rashid Housing Establishment (MBRHE) program.  

The Abu Dhabi Islamic Bank (ADIB) recently announced a new mortgage product, the one-of-a-kind “plot financing”. Under this scheme, both residents and non-residents are eligible. You can apply for a bank loan when you want to purchase plots in the freehold zones. You can borrow up to 60% of the land plot value. 

In conclusion: 

There are different types of mortgages available to the UAE property buyer. You just need to investigate which mortgage provides the maximum benefit. It is wise to shop around the local banks as you may find a mortgage that fits your financial needs.

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