Purchase a house rather than rent if you intend to stay in Dubai for an extended period. These affluent properties in Dubai provide an opulent lifestyle and are regarded as excellent investments. Dubai is one of the few places on earth that delivers decent rental yields as a return on investment.
Most consumers must rely on a mortgage to complete the transaction because they cannot buy a property solely with cash or personal resources. Therefore, you should understand the various forms of house mortgage loans offered in Dubai and the steps necessary to apply for one. Good news: The good news is that an expat can accomplish this.
Whether you’re looking for a new home for your family or an investment, mortgage lenders are well-equipped to handle mortgage applications from non-residents and foreign residents. You’ll need financing to complete the transaction if you purchase real estate in Dubai.
Here are four major factors you need to know about rental property loans in Dubai.
- The amount you can borrow depends on where you live and if you own a home.
One of the things you will look at when deciding how to finance a property as an expat is your borrowing capacity. Your borrowing capability will decide how much money you need for a down payment. While UAE citizens may borrow up to 85% of the property’s worth, your maximum borrowing limit as an expat is 80%. The value of the home you want to finance, and your income and credit score are all important considerations.
For instance, maximum LTV values for homes with market values over AED 5 million tend to be 75% for Dubai locals and 70% for foreigners.
- Learn About the Different Types of Rental Property Loans Offered
Expats can easily obtain a variety of house loan mortgages in Dubai to assist them in financing their real estate aspirations. You should take some time to research the many financing options before deciding about funding a piece of real estate. In the UAE, you can apply for either a fixed-rate or a variable-rate mortgage. Most offers for variable-rate mortgages have a 5-year duration, but fixed-rate mortgages sometimes have 25 years.
Additionally, interest rates will vary depending on the choice. Mortgage interest rates have recently been around 3%, but they are expected to increase in the upcoming year. Due to the certainty of a fixed-rate mortgage, many buyers are persuaded to do so. Additionally, you might qualify for a preferential mortgage deal if you already own a home and are looking to finance a second home or an investment property.
Types of Mortgages
The mortgage application process is open to foreign nationals who want to finance their real estate in Dubai, whether for a primary residence or an investment property.
You may require a deposit depending on your situation and the particular property you intend to purchase. You must choose between a fixed rate package and a variable rate package.
The following are a few of the mortgage options:
- Fixed-rate loans
- Mortgages with Variable Rates
- Low-Interest Rate Mortgages
- Offset Mortgages
- Make Sure You Take Into Account Additional Home Purchasing Costs
The higher expenditures associated with purchasing a home in Dubai are another factor to consider (and one that many purchasers sometimes overlook). Most international purchasers choose to acquire freehold properties from developers, which call for a 10% deposit. But you also need to budget for transfer and closing costs. For instance, the Dubai Land Department charges a 2% transfer fee to anybody buying property in Abu Dhabi or Dubai. In addition, your real estate agent will be charged a certain fee. These fees will also depend on why you want to purchase a house in Dubai.
Last but not least, feel free when purchasing a house. It is always preferable to take the time to fully understand your options before taking the plunge when buying and financing property abroad because the process can be quite complicated. You will be off to a good start once you are well-informed about your financing options for purchasing a property in Dubai.
- Take into account the Affordability Criteria for Rental Property Loans.
When you want to finance a property in Dubai, a few things are considered before you are qualified for a house loan mortgage. These include:
- Your monthly salary
- Your current job status, including whether you are a salaried employee or a sole proprietor
- Age and the property’s value
- According to UAE Central Bank laws, you should not utilize more than 50% of your total income to pay off debts like credit cards, mortgages, and loans. Your debt burden ratio (DBR) lifestyle includes things like Your living costs, the number of dependents you have
- Your credit score.
Debt-Burden-Ratio
The Debt-Burden-Ratio (DBR), which is used in the UAE, is utilized by banks to calculate how much they can borrow.
The proportion of your monthly debt payments to your monthly income is known as your DBR. The bank will use a little higher interest rate when determining future mortgage payments to account for any interest rate increases.
Each bank uses a slightly different formula to calculate affordability. Your monthly income must, however, be at least four times greater than the projected payments.
The Process for acquiring Rental Property Loans
The following are the steps that should be taken into consideration while acquiring a rental property loan in Dubai:
- Choose a mortgage product that satisfies your needs.
- Get the necessary paperwork to get a financial pre-approval. You will receive a letter from your bank confirming the sum of money they are prepared to provide you.
- Choose a property within your price range and negotiate the buying price with the seller. Using our sophisticated filters, you can browse Next Level Real Estate’s most recent listings of properties for sale. With a broad range of properties listed on the website, you can buy apartments in Dubai that best suit your needs.
- Pay a deposit and pick a completion date to secure the deal.
- Additionally, offer any additional justification needed to support your mortgage.
Conclusion
It’s a significant step to finance a home; doing it abroad can be especially intimidating. Many foreigners have made Dubai their permanent residence by acquiring a family home or real estate in Dubai. As a result, the local financial services industry is accustomed to working with foreigners, so if your financial status is sound, you should have no trouble getting a mortgage.
The expert property consultants at Next Level Real Estate can give you the best advice for rental property loans. In addition, the extensive selection of properties on Next Level Real Estate’s website can assist you in finding the one that matches all your requirements. You can buy apartments in Dubai just according to your tastes and preferences.
