Home Loans for Residents and Non-residents in UAE – A Comprehensive Guide

UAE is considered a hub for upgraded living standards and atmosphere. People worldwide prefer adopting the lifestyle in Dubai as it is a luxurious place to live in.

Are you also the one who is currently a resident in UAE and want to invest in the real estate business? Or are you an expat and wondering whether you can get an inexpensive property investment package?

In both cases, the answer is YES. Various banks offer low-interest rates mortgage plans and the best home loans in UAE to get a property. Through its affordable packages, UAE has been eyed by overseas and local investors for its diversified real estate market.

If you want to learn more about home loans for residents and non-residents in UAE and mortgage criteria, browse until the end to ensure you get all the knowledge.

Home Loans for Residents and Non-residents in UAE

Whether you are a UAE national or foreigner, UAE welcomes everyone to invest in their real estate business if they perfectly fulfil their eligibility criteria. Getting a home loan is easy, provided you are aged between 21 to 65 years.

Eligibility Criteria for UAE Resident’s Home Loans

To qualify for home loans in UAE, an individual must show a stable income source and an impressive credit rating. Some banks have employers to judge the credibility of the home loan approval.

§  Borrowing Limits

UAE nationals can borrow up to 85% of the total cost of the property if it is less than AED 5 million. Nevertheless, if the property costs more than AED 5 million, this percentage increases to 70% for UAE nationals.

§  Down Payment Restrictions

The down payment requirement for UAE nationals is 15% of the total amount of the property. In contrast, if the real estate property value exceeds AED 5 million, the down payment requirement increases to 30%.

Eligibility Criteria for Non-residents Home Loans in UAE

If you are a non-resident of the UAE, you must meet the following eligibility criteria to apply for a home loan in UAE. These includes:

  • You must be a resident of any country mentioned in the bank list.
  • You must have regular earnings whether you are self-employed or a salaried individual.
  • You must meet the requirement of monthly income criteria defined by the banks. For example, some banks demand minimum monthly earnings of AED 25,000 or equivalent for loan approval.
  • Various banks approve certain real estate agencies while approving the home loan; therefore, you must ensure that the property is on that list.

Features of Non-resident Home Loans in UAE

The basic features for non-residents home loans in UAE are stated as follows:

§  How Much Loan Can I Get in Dubai?

The approved loan amount can vary depending on your selected bank and financial condition; the top banks in UAE offer high amounts of loans to fulfil your property needs. Except for a few eminent banks, non-resident home loans in UAE can be obtained as high as AED 24 million.

§  Loan Limit

Expats buying a property in UAE for the first time can apply up to 80% of the total value of the property they are buying- with the cost of less than AED 5 million. If the real estate value exceeds AED 5 million, this limit decreases to 65% for home loans in UAE for expats.

§  Loan Duration

As a rule of thumb, the banks approve shorter loan durations for non-residents than nationals. For non-residents, the tenure is less than 25 years, and a maximum age restriction of 65 for salaried non-residents and 70 for business owners.

§  Interest Rates

Interest rates offered for non-residents in the UAE are higher than those defined for UAE residents.

§  LTV Ratios

According to UAE law, the non-resident owner must provide 20% of the property amount for the down payment, provided the total property value is approximately AED 5 million. However, if the property value exceeds the value of AED 5 million, non-residents are bound to pay 35% of the down payment for the home loan approval.

Mortgage Plans for Residents and Non-residents in UAE

Mortgage plans are readily available for expats and nationals in UAE looking to invest in real estate. If you are thinking about home loans in UAE for expats for investment purposes or want a place to live while vacationing in UAE, you can opt for a mortgage plan.

However, the options for non-residents in the UAE are limited and lesser than the perks given to UAE nationals.

Besides, knowing the basic mortgage types available in the UAE is essential to pick the most suitable option concerning your financial stability and monthly income.

Types of Mortgage Plans in UAE

Look at the brief details about the several mortgage plan types available in UAE:

§  Variable Rate Mortgage

As the name indicates, this mortgage plan has a variable interest rate. It is susceptible to any change in the laws or implementation of new regulations. It is considered a double-edged option as it can increase or decrease with time. You must be sure about your financial stability before choosing this option.

§  Discounted Rate Mortgage

In this mortgage type, you are offered a particular percentage discount with a defined amount during the first initial months of the loan term. The tricky part about this type is you must think about whether you will be able to pay the amount monthly after the discount period is over.

§  Fixed Rate Mortgage

This is the most common and basic mortgage plan where both parties agree on a specific interest percentage that can not be increased or decreased during the period. It is a safe option as nothing unexpected can happen during the period.

§  Offset Mortgage

This type is relatively new, allowing borrowers to combine their savings, credit, and loan accounts. Subsequently, whenever you get an extra amount on any of the accounts, the interest rate will be reduced.

§  Remortgage

Remortgage is suitable for you if you have an ongoing mortgage payment plan and want to apply for another loan plan along with the existing one.

§  Capped Rate Mortgage

This mortgage type is slightly similar to the Variable rate Mortgage, where the interest rate is not fixed; however, the agreement is made on the maximum interest rate before starting the loan period. Whenever the interest rate changes in the market, it won’t exceed the defined range.

What are the Mortgage Rates in UAE?

The mortgage rates primarily depend on the property, lender, and borrower’s financial stability. A few years ago, the mortgage rate began at 2.75% on a year fixed rate, 3.89% for 3 years, and 3.99% for the 5-years plan.

However, in the last couple of years, the mortgage market relatively slowed as buyers preferred to buy directly from the payment plans from the developers instead of purchasing the property from the mortgage plans.

Therefore, the mortgage rates in UAE can vary significantly with time, depending on the country’s economic condition, oil prices, and other related circumstances.

Needed Documents for Home Loan as Non-resident UAE

Prior to applying for a home loan or mortgage plan in the UAE, these are the documents you must have ready if you are a non-resident.

  • A statement proof of your monthly salary
  • Passport copy
  • Proof of your residence in the UAE
  • For business owners, show a trade license
  • Proof of current address
  • Bank statement for the last 3-6 months

Process of Applying for the Home Loan in UAE

For your ease and convenience, we have mentioned the essential steps to apply for a home loan. With this help, you can learn how to proceed with home loans for residents and non-residents in UAE.

  • Firstly, approach the bank directly or talk to the mortgage dealer to arrange the required documents. In UAE, home mortgage details are governed through several banks and must be registered with the authorities to be valid.
  • The next step is to search for the right home loan and mortgage type.
  • Once you have decided on the plan, submit the essential documents to the bank of your choice. Many banks and financial institutions in UAE have online loan calculators on the website so you can have an idea about monthly instalments.
  • Get a pre-approval letter; the approval from the bank indicates that you are eligible for the home loan. Moreover, it also states the maximum borrowing limit, interest rate details, and down payment requirements. Generally, it takes 3-5 working days to get a pre-approval letter, which is applicable for 60-90 days; however, it depends on the lender.
  • When both parties agree on the price and property, you can send the down payment and get the payment plan for the home loan servicing.
  • Once all the paperwork and legal formalities are completed, on the final day, the bank and lender will release your loan to the seller – making you the official owner of the real estate property.

To Sum Up!

Having a home in UAE is probably a dream of many individuals. Though the process of home loans for residents and non-residents in UAE is a bit complicated, if you fulfil their required criteria and follow all the essential steps carefully, you can get approved for the loan and mortgage plan.

However, before choosing the mortgage plan, ensure you have studied all the clauses carefully, learn how much a loan can I get in Dubai, and adhere to all the terms and conditions so that there are no hurdles in paying monthly instalments.

With the help of proper planning and the best home loans in UAE, you can build your house or apartment in UAE. Therefore, plan wisely and get your property now!

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