What is the Process of Mortgage in Dubai

Are you looking to buy a property in Dubai but need clarification on the mortgage process? Dubai offers many opportunities for property investment, and securing a mortgage is often a crucial step towards becoming a homeowner. Understanding the mortgage process is essential before applying for a mortgage. In this blog, we will guide you through the step-by-step process of obtaining a mortgage in Dubai. But let’s first understand the different types of mortgages available in Dubai.

Types of Mortgages in Dubai

Here are some common types of mortgages in Dubai:
 

Fixed-rate Mortgage

It is the type of mortgage in which the interest rate remains constant throughout the loan tenure. Fixed-rate mortgages provide stability and allow borrowers to plan their finances accurately.

Variable-rate Mortgage

In a variable-rate mortgage, the interest rate fluctuates based on market conditions. This type of mortgage offers the potential for lower interest rates but also carries the risk of higher rates in the future.
 

Islamic Mortgage

Islamic mortgage, also known as Sharia-compliant mortgage, follows Islamic principles prohibiting interest. Instead, the lender and borrower enter into a partnership where the lender shares the property’s ownership and earns profit through rent.

Offset Mortgage

Offset mortgages allow borrowers to link their savings or current accounts to their mortgage. The balance in the linked accounts is offset against the outstanding mortgage amount, reducing the interest payable.
 

Buy-to-let Mortgage

Buy-to-let mortgage is designed for investors who want to purchase properties for rental income. These mortgages consider the property’s rental potential in addition to the borrower’s financial profile.
 

Eligibility Criteria

Before applying for a mortgage, you must determine whether you meet the eligibility criteria set by lenders in Dubai. The common requirements are:

• An applicant must be between 21 and 65 years of age.
• Banks require a minimum monthly income of AED 10,000 for UAE nationals and AED 15,000 for expats.
• Banks prefer a minimum of six months to one year of continuous employment with the current employer.
• Lenders assess your creditworthiness by reviewing your credit score and report, so a good credit history is necessary.
   

Please note: Banks generally finance up to 75 to 80% of the property value, depending on the type of property and your financial profile.

Documents Required for a Mortgage Application

When applying for a mortgage in Dubai, you will need to provide certain documents to support your application. The exact requirements may vary depending on the lender, but here are some common documents you may need to submit:

• Proof of identity, like a copy of your Emirates ID, passport, and visa.
• To assess your repayment capacity, lenders require proof of income, such as salary certificates, bank statements, and audited financial statements for self-employed individuals.
• You must provide employment letters, contract copies, and bank statements showing salary credits if employed.
• You may need to provide property-related documents, such as the title deed, sales and purchase agreement, and valuation reports.
• Lenders generally require bank statements for six to twelve months to assess your financial stability.

Steps Involved in the Mortgage Application Process

The mortgage application process in Dubai involves the following steps:

Pre-Approval

Before starting your property search, getting pre-approval for a mortgage is advisable. Pre-approval gives you an estimate of the loan amount you are eligible for and lets you narrow down your property choices. To get pre-approval, you will need to provide your financial documents to the lender for assessment.
 

Property Selection

Once pre-approved, you can start looking for properties within your budget. Consider factors such as location, amenities, and future growth potential. You can also weigh the benefits of choosing between off-plan developments and secondary properties.
 

Property Valuation

After finalising a property, the lender will conduct a property valuation to determine its market value. The valuation is essential to ensure the property’s value aligns with the requested loan amount.

Mortgage Offer

If the property valuation is satisfactory, the lender will issue a mortgage offer detailing the terms and conditions of the loan. Carefully review the offer and seek legal advice if necessary.

Legal Documentation

Once you accept the mortgage offer, you will have to provide the necessary legal documents. They include your Emirates ID, passport, and proof of income. The lender will guide you through the documentation process.
 

Mortgage Registration

After completing the legal documentation, the mortgage needs to be registered with the Dubai Land Department (DLD). This step ensures the property is held as collateral until the mortgage is fully repaid.
 

Disbursement

Upon mortgage registration, the lender will disburse the approved loan amount to the seller or developer. Ensure all the necessary legal and financial formalities are completed before disbursing the funds.

Factors to Consider when Choosing a Mortgage Provider

Here are some factors to consider when selecting a mortgage provider in Dubai:
 

Interest rates: Compare interest rates offered by different lenders to find the most competitive option. Even a slight difference in interest rates can impact your monthly mortgage payments.

Processing fees: Different lenders may charge varying processing fees for mortgage applications. Consider these fees when comparing lenders and factor them into your overall cost of borrowing.

Reputation and reliability: Research the lender’s reputation in the market and read reviews from previous customers. A reputable and reliable lender will provide excellent customer service and transparent communication throughout the mortgage process.

Repayment flexibility: Look for a lender that offers flexible repayment options, such as the ability to make additional repayments or switch between fixed and variable interest rates.

Customer support: Evaluate the lender’s customer support services and accessibility. A responsive and supportive lender will address your queries and concerns promptly.

Conclusion

Obtaining a mortgage in Dubai can be a milestone towards property ownership. Always research and compare different lenders to find the most suitable terms and conditions. Stay updated with the latest interest rates and repayment options to plan your finances. The right knowledge and preparation can secure your dream property in Dubai.
 

Don’t forget to check out Betterhomes Mortgage Services when looking for a mortgage in Dubai.