Mortgages in Dubai 2025: Step-By-Step Guide to Buying Property

A lot of people still think that if they are not living in Dubai, i.e., if they are non-residents, then they cannot get a mortgage in Dubai, but that's not the fact. As per the current policy, banks are comfortable lending to non-residents. There are three to four very comfortable banks, and they lend up to 60% to a non-resident. Some banks can, at times, do a slight deviation and try for 70% as well.

But the lending capacity depends on

• The client profile
• The property value they are looking at
• The loan amount they intend to borrow

To understand this, we have three scenarios:

1. If the client is salaried, then one or two banks underwrite them based on their salary and liabilities in their home country. For example, if someone's salary is 50,000, then they: 

• Take 50% DBR, also known as the Debt Burden Ratio, which is a financial metric that measures the proportion of monthly income allocated to repaying existing debts, such as loans and credit card payments, and helps to assess the ability to manage debt obligations. 
• Pull out an AECB or Al Etihad Credit Bureau Report is a credit report issued by the AECB for individuals and companies in the UAE that helps people understand their creditworthiness and debt levels.
• Check his liabilities in the country. 

Now, in this case, if they want to underwrite a person on his income criteria, they will need his:

• The income bank statement where his salary is coming, 
• Country credit report to see his borrowings, like cards and auto loans, or mortgages. 
• Taxation documents to understand the exact money that a person gets in hand, because many European and other countries have taxation as well. This is known as the salary profile. 

2. In self-employment, they do complete underwriting, which means access to:

• Company documents 
• Company bank statements 
• Company credit report 
• Company audit report 

Then, they are underwritten as completely self-employed non-residents. 

3. Another way is lending on a client's balances. Two banks look at their balances in their accounts. It could be:

• Saving account 
• Current account 
•  Here, they don't accept:
• Call deposits 
• Fixed deposits 
• Investment accounts 

They purely underwrite based on how much money the individual has parked in their account at a given point in time.

In some cases, the clients have money in their company accounts and not in their personal accounts. Because of this, it gets very difficult for the banks.

For example, if X owns the company and has a personal account and a company account, then they can still club it because X is the sole owner. But if X and Y are owners, then they can't take X's eligibility on a company bank statement because they can’t justify how much money is parked in the business from X or Y. So, if X is the sole owner, then company bank statements can be taken, but with partners, it gets difficult to take the statements.

Firstly, the bank will identify the primary applicant or the primary borrower. 

• If the wife is a co-borrower, which means we are clubbing income, then we need her income documents. 
• If the husband is the primary borrower and the wife is just a co-applicant, then we don't need the wife's income documents. 

For example, everything is in the husband's name, and the wife is a housewife and doesn't have strong income documents. She can still become a co-applicant on the property. They can still hold the property jointly, but the loan will be processed in the name of the husband. He will be the borrower, which means his life insurance is covered, so if in the future his death happens, then the bank can claim and close the mortgage

When taking a mortgage, life insurance is compulsory. Almost 90% of the banks are taking, and only one or two of the banks are making an exception, but that is their credit risk call. They are doing it because they feel they can manage it in their portfolio insurance, so it's the bank's call. 

On a serious note, anyone who borrows a big mortgage should get insured, as no one knows what the future holds, so it's better to have security for tomorrow. If there is insurance, then the bank just claims the life insurance and gives the property to that individual's legal heir, which could be kids, a wife, or parents. So, if you have insurance when you've taken a mortgage, then it makes life much easier for the people inheriting the property in the future. 

Also, the life insurance cost is very nominal and not that expensive, unless you have done a medical test for the applicant where he has certain diseases because of which the premium is spiked up. If it's a normal individual where there is no medical condition, then the life insurance premium is very nominal.

The Central Bank said that now we cannot finance the 4% DLD and the 2% agency commission, which previously used to happen. Initially, the banks were financing 80% or 70%, as per the total LTV of the cost, which is the loan-to-value ratio typically representing the amount of mortgage compared to the property's value, so either someone was getting 84% or 70%, which is for residents. The non-residents were also getting on a bank-to-bank basis.

The whole change happened when the bank looked at the business happening or at the trends that they want to cut down on, and so now no banks finance a portion of the associated fees. 

Meaning that, if today a client is buying a property, 
Less than 5 million, he will get:

• 80% finance 
• 26-pocket contribution 

And 5 million above property value:

• 70% finance 
• 36-pocket contribution

It is better to get in touch with the mortgage broker 6 months in advance to:

• Understand your eligibility 
• What you need to be aware of is that the bank will check. 

This makes sure that you are well prepared, and when the right time comes, you simply give those required documents without any delays in arranging them. Many times, customers are based in countries where the bank statement and documents need to be translated, and since in every country the timeline is different for translation depending on the size of the documents, like someone may have 50 documents that could take one month.

So, that's why it is better that before 6 months of handover, the client gets in touch with the mortgage broker:

1. Understand the paperwork 
2. Be well prepared 
3. Finally, 2 months before the handover, get the mortgage loan

The resident finance stands at 20% up to 5 million dirhams. For a property up to 5 million dirhams, a resident living here can get 80% financing.

• 20% is the contribution 
• 80% is provided by the banks 

All the banks are lending based on individual incomes. None of the banks is lending based on the visa status. So, for them, it is very simple.

For example,

• If a person, say, A, has a visa in the UAE from an employer, he should have income from that employer. 
• B has a visa but no income, then also he will still be treated as a non-resident because he would have taken a visa for some health reason or some regular reason like coming to meet parents staying there, etc. 

 
Even if you have a Golden Visa, nothing would change, as the bank is looking at which is the country where your income is generated in to underwrite you for the loan. So, if someone has a Golden Visa but no income in the UAE and their income is in the UK, US, Canada, or Australia, then they will be treated as a non-resident. So, a visa may help us in opening an account and getting life insurance easily, but on the lending parameter, nothing will change.

So, in short, if someone buys an offline property and gets a golden visa, they should not think that they will get an 80% mortgage but will only get 60% unless: 

• They have a business 
• A salary 
• An income over time
• In these cases, they can try to get this benefit.

To understand this, let’s assume a person bought a property in Amalfi for 7.5 million dirhams when it was under construction. So, when he got the handover from Dubai properties, he had his first loan for 3 million dirhams, and later on, 

• The house was valued at 12 million dirhams, and then he wanted to buy another house, so he got a top-up and received 5 million dirhams in hand and purchased another property in Dubai. 
• Similarly, in 2 years, the same property became 22 million dirhams, and again he took a top-up and bought another 5 million dirham house in Dubai. 

Not all properties will have that much appreciation, but there are some villas and townhouses where the scope of appreciation is higher than an apartment. Old properties in Arabian Ranches 1, Meadows, Springs, etc, experience this top-up phenomenon. 

In Jumeirah Island, in most cases, people

• Take a top-up because of the current value 
• Get a good upgrade done on the unit and fetch another 10 million dirhams

Let's assume someone has a property worth 1 million dirhams without a loan. In this case, a salaried resident client can get 80%, i.e, 800,000, specifically to buy another property and not to use the money for any other purpose. 
So, basically:

• If a person is buying a property, then the bank will give 80% to buy a new property.
• If the property is already fully paid, then in that case, the 80% or the 60% is given, depending on whether the resident or non-resident, only to acquire another property.
• Or, maybe he already has a property and just needs to pay a handover payment to a developer.

In this case,

• In 80% of the banks, there is no difference; only the processing fees will be high when they release equity to the client. 
• 20% of the banks have a slight variation of 1% because they want to keep a differentiation in their portfolio, where they feel they should earn more if the client is coming to them for an equity release. 

The lowest is in the range of 3.99%, which is the majority rate, but some banks are dealing at 3.98% or 3.75%. Banks giving the lowest rate are heavily loaded; clients want the cheapest, but that particular bank may take two months for a pre-approval because everyone wants to go for the lowest.

How much is the difference in the rate of interest between a bank giving a loan to a resident client and a non-resident client?

1% to 1.5%, depending on the bank. A minimum 1% gap is kept just for them to earn on that separate portfolio because the risk is high, as a non-resident client cannot be tracked as well in the future, so that's why the bank feels that the spread should be high because the risk is high.

Do banks open accounts for non-residents while giving them loans?

After the pre-approval, the banks open the account for non-resident clients. 

If the client takes a pre-approval and starts looking for a property, then within that time frame, they open the account. Some banks take:

• 2-3 days because they have seen his KYC documents, and compliance approval is there. 
• A week or 10 days more, depending on:

1. The client's profile back home
2. His nationality 

How much time is taken to disburse the finance once the banks have received a pre-approval and all the paperwork is completed?

• For a non-resident:

Generally, a time of 2 months is taken because all the banks are heavily loaded. This much time frame must be notified to the client, so that in 2 months the transaction can be completed. 

• For a resident:

The whole process can be further completed in a month. 

1. All bank loan documents have to be signed within the country's borders.
2. The account opening also has to happen within the country. 

So, these two documents need to be physically signed.

Everything else does happen remotely now, but they do not accept it when a bank is involved because they are lending money, so they want the person to be physically present, and that is not the bank demanding, but a practical approach.

Do non-resident clients also get equity release if they want to upgrade their properties?

Like the resident clients, the non-residents are also given the privilege to get an equity release for upgrading their properties.

What is the minimum salary required by a resident to get a home loan in Dubai? 
As of today, a minimum fixed salary of 10,000 dirhams is essential. An income salary of less than 10,000 dirhams does not qualify for a mortgage. 

A person with a 10,000 dirhams salary can qualify for what amount? 
Such a person qualifies to get a loan amounting to 7,20,000 because there is a central bank rule that you cannot borrow more than seven times your annual income, i.e, 120 × 7, is the maximum loan amount.

What is the processing time for residents?
The residents' approvals are much faster. 

• Sometimes, in 1 day
• Some banks give a pre-approval to a salaried client within 2 days. 

For residents:

1. If the seller does not have a loan, everything can be completed in 1 month. 
2. If the seller has a loan, assume 45 days.

The loan does not get affected in case a person migrates. He can inform the bank that he is moving out of the country as he got a job somewhere outside and share the offer letter, then the bank may convert his loan from a resident to a non-resident. If he pays on time, then the bank has no issues with it.

Banks also do not want to lose business. Also, it is very impractical for banks to tell their clients that the loan was granted just because they were a resident, and now that they are moving out, they need to settle it down.

The percentage of interest rates differs from residential to commercial properties.

Residential rates are cheaper because the demand is higher and the risk is lower. There are more people who will buy residential properties because both salaried as well as self-employed both need a house.

But if we look at commercial properties,

• 90% of self-employed people will invest in commercial property for themselves or investment.
• Only 10% will be salaried people who want to venture out into commercial property for investments.

90% of the banks focus on residential because it's their core business, and only 10% of banks indulge in commercial properties. Moreover, not all banks like commercial because after Covid-19, we have more business centers, work from home, remote working, and hybrid working, so even the big corporates are doing that, therefore making less space for an individual or an investor to have high returns on commercial, unless it is in the middle of the city.

It is not considered income because it is not a stable income. In the future, that house can become vacant, and the bank doesn't want a situation where they lend to an individual only on rental income. If two houses become vacant, then the client can easily say that they can’t repay. So, in this case, the bank gets impacted; that’s why the bank wants to lend to people who have a business income or a salary income. Rental is the secondary part. 

Only rental is there as a product with some banks, but it doesn't excite them because the risk is very high, and they understand that this individual doesn't want to do a core business. He is just playing with properties, and in the future, when the market changes, he can easily leave the country.

It is standard 1% or 10,000 dirhams, whichever is lower, and it has been kept like this to encourage people to switch properties much faster. For example, if we buy a house and in 6 months we see appreciation, which will attract us to sell, and if the penalty is less, we will sell it. 

What is meant by 10,000 dirhams and 1%?

At any given point in time, if the outstanding loan amount is less than a million, then it will be 1%, so if the loan amount is 800,000, then 8,000 is the fee. Anything above that, say a 10 million or a 20 million dirhams loan, the flat charge will be 10,000 dirhams as early settlement irrespective of the loan value.

It's a great thing, as someone who has taken a mortgage, in the future, wants to flip the property, they can easily do so by just paying 10,000 dirhams

A mortgage broker is someone who has access to all the banks. If 14 banks are lending and the broker has access to all 14 banks, then they can tell after seeing their client’s profile that:

• Banks 1 and 2 will give them the highest loan amount
• Banks 3 and 4 will give them the lowest interest rate

Helping in deciding that with which bank they want to proceed with. 

But directly going to any one bank would only offer what their product is offering. So, there won't be any comparison or benefit in knowing that. It is like going to a single-cuisine restaurant where you will get only one cuisine or going to a multi-cuisine restaurant where you have more options, from which you can eat different things and satisfy yourself. 

Is a person required to pay any extra charges to a mortgage broker?

In terms of charges, when a person takes mortgage through a broker instead of going to a bank directly, he is not required to pay any extra fees to the broker. 

In most cases, the person need not pay anything to them, unless it's a structured case, because these brokers are officially paid by the bank. So, we can say that the brokers help them and provide end-to-end assistance till the transfer is completed

Some banks provide such provision, but only to the residents and not to the non-residents, because the company should have a physical business year for the bank to underwrite it. So, if it's just a holding company where they are just holding the asset, in that case, the bank will not provide a mortgage, because then that profile becomes the same, only a rental income profile, so the risk is higher.

For example, if someone has an LLC company, which is a physical business, and due to external partners, he has bought an asset under the company name, then some banks could make an exception and lend to them under the company name. But in those cases, the interest rate is higher and the loan tenor is less like they don't get 20 or 25 years. 

What is the tenure of the mortgage loans?
The maximum tenure is 25 years for a resident or a non-resident, depending on their age at maturity. 

What is the age of maturity?
For a salaried client - 65 years 
For a self-employed client - 70 years 

So, which means if someone is:

• 50 years old and self-employed, they can get 20 years 
• 50 years old and salaried, they can get 20 years till the age of 70 years as an exception if he has a Golden Visa or are high-profile, but generally it is kept at 65 years

Buying a home for living or investing is a huge challenge for many people interested in buying in Dubai, whether they are residents or non-residents. Lending loans as mortgages facilitates individuals to readily and easily own properties and enjoy the great capital appreciation, the magnificence, and the vibrancy of this heavenly paradise.