Mortgage for foreigners: the way to buy an apartment in Dubai

Place for Investing in Property

In accordance with the laws of the UAE, buyers of real estate who are not residents of the country can purchase a property in full ownership only in certain areas that are called «free zones». As a rule, it is not difficult to find an apartment of such a plan: developers in the UAE offer a large selection of development projects in this category. However, the question arises as to what means can be used to pay the mortgage? Obviously, it will not be possible to take out a loan in your country to buy a property in the United Arab Emirates. Then the mortgage comes to the aid of investors.

What do I need to get a mortgage in Dubai?   

The mortgage loan is one of the ways to buy real estate in the UAE. As in many other countries, buying a property with the involvement of credit funds still entails a large one-time expense, such as an initial payment. Its value may vary depending on the stage of construction and some other factors. If possible, it is better to clarify this point in advance by connecting a real estate agent.

There are also other requirements for the loaner:

  • Age: from 21 to 65 years;
  • Availability of a resident visa;
  • Job position or business in Dubai.

The maximum mortgage term for foreigners is 25 years, but it should be understood that the overpayment in the case of the maximum term will be gigantic. The optimal solution, which experts also recommend, is to take a mortgage for 10 years.

The process of getting a mortgage

The process of getting borrowed funds for real estate consists of the following stages:

  • Pre-approval. The bank representatives preliminarily decide whether the potential buyer meets the minimum requirements of solvency and business reputation. This procedure lasts from 3 to 4 days. For consideration of the loan application, you will have to pay the bank 1% of the estimated loan amount. In case of refusal, the funds will be refunded.
  • Receiving a letter of offer from the bank. If the bank is ready to consider you as a mortgage client, you will receive an email with the terms of the future loan, among which the amount of the initial payment, the interest rate on the loan and the term will be indicated.
  • Transaction execution. After the approval of the application, the buyer is given 2 months to choose a property suitable for the mortgage conditions and negotiate with the seller. When a suitable object is selected, the investor will need to sign a Memorandum of Intent and make a deposit for the apartment.
  • Ownership transfer. After completing all legal procedures, the buyer, together with the seller and the representative of the bank, contact the Dubai Land Department: this is the only way the ownership passes from the old owner to the new one. The original certificate is prepared within 3 days. This document will be stored in the bank until the mortgage is fully repaid.

Types of mortgages in Dubai

The UAE has its own banks, as well as branches of international ones. In general, the difference between banking programs is the method of interest accrual:

  • Fixed. In this case, the interest rate will not change during the entire term. Usually, it is valid for a short mortgage term: from 1 to 5 years.
  • Floating. The interest on the loan is reviewed quarterly depending on the market situation and Central Bank rate.
  • Discount. The Bank may offer a promotional rate for part of the term.
  • Offset. This type of loan allows you to link a loan to your current account. The funds that remain in your account are debited to the mortgage account. The interest on the loan is calculated on the difference between the balances on the credit and debit account.

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