UAE home loan – What you need to know before you buy

Getting the best UAE Mortgage Deal

UAE Home Loans

Securing a UAE home loan to buy a property in the UAE

UAE is one of the biggest property markets in the world currently. The price of real estate is growing daily in the UAE, with the stunning architecture, use of unique designs and material and also increase of population in the countries property is flying off the shelf to expatriates relocating to the Emirates.

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Investment in UAE property is likely to pay off in leaps and bounds for even the amateur property buyer in the short term, however as a long term investment the market can be defined as speculative at best and possibly foolhardy at worst.

As you visit this area and the sites selling property it is likely that not only will you be drawn but that you will also be attracted to many of the properties on sale. The main problem that faces property investors in UAE is how to get the best UAE home loan for the purchase of a villa or apartment.  Of course there are many mortgage and home loan options available to you from UAE banks that are only too ready to write you a facility to buy the property.

Many UAE home loan and mortgage clients start looking for the mortgage when they have already found the property they wish to purchase.  Because at that time you are pressed and desire to make a deal quickly, it is most likely that you will be taken advantage of and rush into a mortgage deal without having the ample time required to shop around.

If you do not have the time to negotiate or the patience to wait for a better deal in case you lose the property you may find yourself being rushed into a high interest loan that the future value of the property does not cover, basically trapping you in a negative equity situation. You may therefore end up with a high interest, costly mortgage on a property that is worth less than the property value.

On the other hand, those who are wise take the time to find the mortgage first, and then go looking for the property. This ensures that the mortgage they are paying for is well within their budget and with the cost of the property, and that they get the best possible interest rate.

Do you really need a UAE home loan?

Before you enter into a contract with a UAE mortgage provider you should check in your home country to see if they offer second home mortgages.  If you already have a property in your own country with an element of equity it is likely that the same bank will only be too happy to extend another mortgage facility to you for your Dubai property under a second home mortgage agreement.  This is often much less costly than sourcing a UAE home loan and paying the higher rates of interest available from UAE mortgage lenders.

The UAE mortgage process

When beginning the process of the mortgage application, you need to put together your passport including the visa, salary statements, 6months of bank statements and details of all liabilities in and out of the country. During the final stages, you will also require identification documents of the seller and a copy of the sales agreement. Once all documents have been issued to the bank, a valuer is sent to come up with the final valuation of the property, and the fees from the same valuation / price you pay are paid by the buyer. The final mortgage approval in UAE cannot be done until the bank has received the valuation report.

The mortgage must be registered with the developer and the banks, and to do so the buyer will need to fill out the no objection certificate.

Once the mortgage is completely registered, the title deed is issued to the bank that keeps the original and gives you the certified copy. You are at this point required to pay all the necessary commissions before taking over the property. The process of acquiring a mortgage for the UAE does not differ much with other mortgages, although the steps must be followed carefully to avoid frustration.

It is also important to note that you will be required to make a 10% deposit of the required mortgage fee, some banks require more depending on the loan term. Such deposist can be made directly to the bank or through a manager’s cheque. Uae mortgages are not fully financed, and the 10% is often non-negotiable although some mortgage institutions, depending on your income history may demand a higher percentage of the deposit. Again shop around for the best deal and get pre-approved before you go on the hunt for a house and you will be ready to strike and secure your property faster when you are ready.

About John Robberts
John Robberts is a journalist with 12 years experience of living and working in the United Arab Emirates.