From a house to a home: Your first steps to obtaining a home loan

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  • Obtaining a home loan in the UAE for expats is easier than you think.
  • Understanding the basics and what can get is imperative, before searching for that perfect home.
  • Banks such as Standard Chartered and HSBC offer great rates; however, your financial situation dictates what you’re entitled to.

Life in the UAE is nothing short of amazing – from the exciting range of things to do to the impeccable standards of living, it’s no wonder many people choose to build their homes here.

And so, when it comes to applying for a home loan, it’s easier than you think.

To start, let’s clear up a few speculations; property buying in Dubai is no longer as volatile as people make it out to be. While the economy may have faced a few troubled times, investing in property in this booming country is growing to be a widespread norm.

Now that that’s out the way, let’s get to the nitty-gritty

House mortgage UAE

Before you begin, here are a few things you should know; as an expat, there are a few costs to consider before you apply. If you’re looking at a property valued at higher than AED 5 Million, you have to pay a minimum deposit of 25% of the purchase price. In Dubai specifically, you will also need to pay an additional 4% in transfer fees and a 0.25% mortgage registration fee. This is pretty standard for most Emirates, but the amounts may differ. Other expenses you need to add in will be valuation fees, real estate commission and an establishment fee.

While it may be a lot to take in; your fees will only be about 5 to 7% of the total value of your property. In some cases, banks will allow you to add up to three-quarters of these fees to your entire loan borrowed.

But where to from here? Well, now we get to the pre-approval stage

If you’re a prospective buyer, you need to consider your financials before serious property searching. Understanding your financial situation and which banks give you the best bang for your buck is imperative. When you sign a sales agreement, you would need to also hand over a cheque for 10% of the purchase price. And if you do commit to an agreement before securing financial approval, bank finance will be denied, and you lose that deposit.

It all might sound a bit overwhelming, so finding a competent and professional mortgage broker helps a lot, especially if you are a first-time home buyer.

When agreeing with a seller, be sure that the contract stipulates that the transaction is subject to a property valuation by the bank – this not only protects your deposit but also can be done before the sale agreement is signed.

When choosing a bank, take the following into account; a bank will look at your current and past financial situations when deciding on granting a loan. Factors include your monthly income, your current or previous debt (if any) as well as your ability to repay the loan within the time. This becomes your approved mortgage limit.

Regarding the duration of your mortgage, the maximum is 25 years in the UAE, for salaried people. Ideally, choosing a longer-term minimizes monthly repayments, but also increases the total interest, so consider what you can do in your situation.

Now it’s about choosing the best bank for you

We did a bit of research of which banks will offer the best rates on a loan amount of AED 2,000,000, to be paid over 20 years. (Obtaining a mortgage broker might help you decide on which bank to go with, as they generally have experience with more specific cases). The following banks were ranked the highest:

  1. Standard Chartered:
    Minimum monthly salary: AED 30,000
    Monthly payment: AED 7,532
    Flat rate: 1.92%
    Reducing rate: 3.49%
    Down payment: 25%
  2. ADIB
    Minimum monthly salary: AED 15,000
    Monthly payment: AED 7,631
    Flat rate: 2.06%
    Reducing rate: 3.75%
    Down payment: 25%
  3. HSBC
    Minimum monthly salary: AED 30,000
    Monthly Payment: AED 7,447
    Flat Rate: 1.8%
    Reducing Rate: 3.24%
    Down Payment: 25%

Banks will always differ and depending on your situation, other factors such as late payments, salary transfers, etc. will be affected. It’s a matter of asking the right questions and doing one’s research.

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