Dubai is a city that attracts many expats from around the world for its opportunities, lifestyle, and culture. Dubai is also a city that offers many options for buying property, whether it is for investment, residence, or retirement.
However, buying property in Dubai can also be a complex and challenging process, especially for expats who are not familiar with the local laws, regulations, and market conditions.
One of the most common and convenient ways to buy property in Dubai is to use a mortgage. A mortgage is a loan that you borrow from a bank or a financial institution to finance your property purchase. A mortgage allows you to pay for your property in installments over a while, usually 15 to 25 years.
A mortgage also allows you to benefit from the appreciation of your property value over time. However, getting a mortgage in Dubai as an expat can also be a daunting and confusing task, as you need to meet certain criteria, provide certain documents, and compare different options. In this blog post, we will help you understand how to buy property in Dubai with a mortgage as an expat. We will also share some tips and best practices on how to get the best deal and avoid common pitfalls.
Step 1: Know your eligibility and affordability
The first step to buying property in Dubai with a mortgage as an expat is to know your eligibility and affordability. You need to know if you qualify for a mortgage and how much you can borrow and repay. Here are some of the factors that determine your eligibility and affordability:
- Your residency status:
To get a mortgage in Dubai as an expat, you need to have a valid residency visa and a proof of income. You can get a residency visa by working for a company in Dubai, setting up your own business in Dubai, or investing in a property in Dubai. You also need to have a bank account in Dubai and a good credit history. - Your income and expenses:
You need to have a stable and sufficient income that can cover your mortgage payments and your living expenses. You also need to have a low debt-to-income ratio, which means that your total monthly debt payments should not exceed 50% of your monthly income. You also need to have enough savings for the down payment and the closing costs. - Your property type and value:
Lastly, you need to choose a property approved by the bank and meets the minimum value requirement. The minimum value requirement varies depending on the bank and the property type, but it is usually around AED 500,000 for apartments and AED 1 million for villas. You also need to pay a down payment of at least 25% for apartments and 35% for villas, as per the UAE Central Bank regulations.
Step 2: Compare different mortgage options and lenders
The second step to buying property in Dubai with a mortgage as an expat is to compare different mortgage options and lenders. You need to know the different types, terms, and features of mortgages available in Dubai and the different banks and financial institutions that offer them. Here are some of the factors that you need to compare:
- The interest rate: The interest rate is the percentage of the loan amount you pay to the lender as the cost of borrowing. The interest rate can be fixed or variable. A fixed interest rate means that the interest rate remains the same throughout the loan term. A variable interest rate means that the interest rate changes according to the market conditions and the lender’s policy. The interest rate can also be calculated on a reducing balance or a flat rate basis. A reduced balance interest rate means that the interest rate is applied to the outstanding loan amount, which decreases over time as you repay the loan. A flat rate interest rate means that the interest rate is applied to the original loan amount, which remains the same throughout the loan term.
- The loan term: The loan term is the duration of the loan, which is usually 15 to 25 years for mortgages in Dubai. The loan term affects the amount of the monthly payments and the total loan cost. A shorter loan term means that you pay higher monthly payments but lower interest charges. A longer loan term means that you pay lower monthly payments but higher interest charges.
- The fees and charges: The fees and charges are the additional costs that you pay to the lender and other parties involved in the mortgage process. The fees and charges can include the application fee, valuation fee, processing fee, arrangement fee, mortgage registration fee, insurance fee, early settlement fee, late payment fee, and service fee. The fees and charges can vary depending on the lender and the loan amount.
To compare different mortgage options and lenders, you can use online tools, to get free and instant quotes from multiple banks and financial institutions in Dubai. You can also use online calculators, such as Mortgage Calculator, to estimate your monthly payments and interest charges based on different scenarios. You can also consult with a mortgage broker, to get professional advice and guidance on the best mortgage deal for you.
Step 3: Apply for a mortgage and get a pre-approval
The third step to buying property in Dubai with a mortgage as an expat is to apply for a mortgage and get a pre-approval. You need to submit your application and your documents to the lender of your choice and get a confirmation of your eligibility and affordability. Here are some of the documents that you need to provide:
- Your passport and visa copy
- Your Emirates ID copy
- Your salary certificate or contract
- Your bank statements for the last six months
- Your credit report
- Your property details and valuation report
- Your down payment proof
A pre-approval is a letter from the lender that states the amount, the interest rate, and the terms of the mortgage that you are qualified for. A pre-approval is valid for a certain time, usually 60 to 90 days. A pre-approval is not a guarantee of the final approval, as it is subject to the verification of your documents and the appraisal of your property. However, a pre-approval is a useful tool that can help you in the following ways:
- It can help you narrow down your property search and focus on the properties that are within your budget and preference.
- It can help you negotiate with the seller and the agent and show them that you are a serious and qualified buyer.
- It can help you speed up the final approval and the closing process, as you have already completed most of the requirements.
Step 4: Find and finalize your property and sign the sales agreement
The fourth step to buying property in Dubai with a mortgage as an expat is to find and finalize your property and sign the sales agreement. You need to search for your ideal property and make an offer to the seller and the agent. You also need to sign the sales agreement and pay the deposit and the fees. Here are some of the steps that you need to follow:
- Search for your property:
You can search for your property online by viewing video listings through Viewit. You can also hire a real estate agent, to help you find and view the properties that match your criteria. You should also inspect the property thoroughly and check its condition, location, amenities, and legal status. - Make an offer:
Once you find your property, you can make an offer to the seller and the agent. You can negotiate the price, the terms, and the conditions of the sale. You can also ask for a reservation agreement, which is a document that secures the property for you and prevents the seller from selling it to someone else for a certain time, usually 15 to 30 days. You may also need to pay a reservation fee, which is a percentage of the property price, usually 5% to 10%, that is refundable if the deal falls through. - Sign the sales agreement:
Once you agree on the price, the terms, and the conditions of the sale, you can sign the sales agreement, which is a legal contract that binds you and the seller to the transaction. You also need to pay the deposit, which is a percentage of the property price, usually 10% to 20%, that is non-refundable if you back out of the deal. You also need to pay the fees, such as the agency fee, the transfer fee, the registration fee, and the trustee fee.
Step 5: Get the final approval and the mortgage offer
The fifth step to buying property in Dubai with a mortgage as an expat is to get the final approval and the mortgage offer. You need to submit the sales agreement and the property documents to the lender and get the final confirmation of your mortgage. You also need to sign the mortgage offer and pay the fees. Here are some of the steps that you need to follow:
- Submit the sales agreement and the property documents:
You need to submit the sales agreement and the property documents to the lender for verification and appraisal. The property documents include the title deed, the floor plan, the building completion certificate, and the no-objection certificate (NOC) from the developer. The lender will check the validity and authenticity of the documents and the value and quality of the property. - Get the final approval and the mortgage offer:
If the lender is satisfied with the verification and the appraisal, you will get the final approval and the mortgage offer. The mortgage offer is a document that states the final amount, the interest rate, and the mortgage terms that the lender is willing to lend you. - Sign the mortgage offer and pay the fees:
If you agree with the final approval, you can sign the mortgage offer and pay the fees. The fees include the mortgage arrangement fee, the mortgage insurance fee, the mortgage registration fee, and the valuation fee. You also need to get a no-objection certificate (NOC) from the lender, which is a document that confirms that the lender has no objection to the transfer of the property to your name.
Step 6: Transfer the property and the mortgage
The sixth and final step to buying property in Dubai with a mortgage as an expat is to transfer the property and the mortgage. You need to complete the legal and financial formalities and get the ownership and possession of the property. You also need to start repaying the mortgage according to the agreed schedule. Here are some of the steps that you need to follow:
- Transfer the property: You must transfer the property to your name by visiting the Dubai Land Department (DLD) or a trustee office. You need to bring the original and the copies of the following documents:
- Your passport and visa
- Your Emirates ID
- Your mortgage offer and NOC from the lender
- Your sales agreement and NOC from the seller
- Your title deed and floor plan
- Your building completion certificate
- Your proof of payment of the fees and charges
- Transfer the mortgage: You need to transfer the mortgage to your name by visiting the lender’s office. You need to bring the original and the copies of the following documents:
- Your passport and visa
- Your Emirates ID
- Your mortgage offer and NOC from the lender
- Your sales agreement and NOC from the seller
- Your title deed and floor plan
- Your building completion certificate
- Your proof of payment of the fees and charges
- Get the ownership and the possession of the property: You need to get the ownership and the possession of the property by receiving the following documents and keys:
- Your new title deed from the DLD or the trustee’s office
- Your mortgage contract from the lender
- Your keys and access cards from the seller or the agent
- Start repaying the mortgage: You need to start repaying the mortgage according to the agreed schedule by setting up a direct debit or a standing order from your bank account. You also need to monitor your mortgage balance and interest rate and make any adjustments or changes if necessary.
Congratulations! You have successfully bought your property in Dubai with a mortgage as an expat. You can now enjoy your new home and your new life in Dubai.
If you are looking to buy a property in Dubai, check out Viewit where you’ll find immersive video listings to help you make an informed decision.