Are you looking for taking a home loan in the UAE then it is the first step towards realising your dream home will come true. It is a challenge for expats to get a home loan in the UAE. There is a good option for getting a home loan by mortgage or home loan option and this will fulfill your dream.
Taking a home loan can be done through banks over a period of time you keep paying loan installments and one day the loan will be cleared and you will have home registered on your name. Here in this article we provide you all the details for home loans for expats in the UAE.
- What is Home Loan in the UAE?
- Rules for Home Loans
- Kinds of Mortgages
- Eligibility requirements for Expats
- Applying for the Loan
- Where to apply for Loan
- Property refinancing
- Advantages of taking a Loan
- What is Home Loan in the UAE?
Home loan is a good way to purchase a home in the UAE where a lending institution will provide a finance option for purchasing a home with a loan option. On the type of mortgage you opt for, the borrower will pay the interest for the loan tenure. Expats will get a mortgage loan in the UAE where you can apply for a loan, once the conditions are met you will be granted a loan by the lending institution.
- Rules for Home Loan
Expats will be offered a loan to value of up to 80% and some rules for getting a loan are as follows.
Expats will get a loan amount of max of 25 million AED
For Down payment (DP) you have to pay 20% to 30% for Expats and it depends on property value.
- Suppose if property value is 5 million then DP should be 30 percent
- Suppose if property value is less than 5 million then DP should be 20%
The property value is the deciding factor and the borrower’s earning capacity will depend on the Loan to value ratio highlights. For expats the max limit is 80 percent.
- Suppose an expat purchases a building in Dubai and the worth is 4 million AED then the loan amount will be 3.2 million AED. Interest rates are given according to the EIBOR rate and they may be ‘fixed & variable’
- Kinds of Mortgages
When you choose the right only then it will be easy for you to pay off the loan so knowing the kinds of mortgage is very important. Here are fixed mortgage rates and variable mortgage rates.
Fixed mortgage
The interest rate is fixed and it is set prior to agreement, the interest rates are constant for the whole period of loan term. Interest rates are fixed and if you are looking for a long term plan then choosing a fixed mortgage is the best idea.
Variable Mortgage
As the name suggests it is the reverse of fixed mortgage here the interest rates keep changing with change in prices and EIBOR. If you are ready for sudden changes in price rise then you can choose a variable interest rate mortgage.
Click here for All about Second Mortgage
- Eligibility requirements for Expats
In the UAE both the salaried and self employment individuals can go for a loan the requirements may be different for both of them below listed are few check points that you may note.
- At least 6 months of service is required for salaried employees
- A good credit history is required for self employed individuals
- UAE resident borrowers are accepted
- Age 21-65 years
- AED 15,000 is monthly earnings which is required but some banks approve with income of AED 10,000 also
- Applying for the Loan
The process is very smooth if you are applying for a home loan where you just need to submit simple documentation for processing the loan. Below are the documents required for getting the loan.
- Copy of valid Emirates ID & passport
- Salary certificate, 6 months bank statements, pay slips for salaried person
- Trading licence, 6 months bank statements, Financial statements audited, MOA for self employment individuals
- Any other documents as required by the bank officials from time to time
6. Where to Apply
You can apply for this loan if you want to go for a home loan. All you need to do is arrange all your documents and check for your requirements and select the bank which you want to go to. Different banks provide different services and based on your requirements you can select which one to finalise. Here is a list of some of the banks which offer home loans to Expats.
- Emirates Islamic Bank
- Mashreq Bank
- HSBC
- United Arab Bank
- Standard Chartered Bank
- First Abu Dhabi Bank
- Emirates NBD
Click here for Payday vs Installment Loans
7. Property refinancing
Refinancing is a process of financing again where the property mortgage will be replaced by another new mortgage. The new terms and conditions will be favorable to the borrower. However there is a fee associated with refinancing. Expats get the facility of refinancing by switching to another bank, if another is offering a good deal then the expat borrower can switch loan to another bank.
8. Advantages of taking loan
The most important advantages of taking a home loan are listed below.
You can own a property
A Home Loan facilitates the borrower to own a house over a period of time. Once you purchase a home you will see that the value of the home will increase in a few years. A good rental income or using property for living is a good idea during the skyrocketing cost of living prices.
Purchasing a Dream Home
You can buy your dream home with easy and affordable installments. The regular payment of installments will enable you to become the owner of your home over a period of time. Purchasing a dream home is a reality for expats with a Home loan.
Flexible payments
Home Loans are more advantageous as they have flexibility with interest rates, repayment options, refinancing, monthly payments and much more. The flexibility of a loan tenure can range from 10 years to 25 years.
Take away
The UAE provides a good opportunity for Expats to own a home. This is not just an out right payment where you have a burden but you get a chance to pay it in installments. The dream of having a home in the UAE for Expats is a gift where they can settle down in the country with shelter in their own home.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
