Mortgage Loans

A mortgage loan is a kind of secured loan, which is offered by banks or other financial institutions against the borrowers’ residential or commercial property. The borrowers can use the amount collected by keeping the property in the form of collateral until the repayment of the loan for different purposes such as the expansion of business, payment of medical expenses, funding their kids’ education, and much more.

Mortgage UAE

Over the years, UAE has gained popularity as a destination for the expatriates, especially in Abu Dhabi and Dubai (as these Emirates are business-friendly). To align with such a trend, the UAE mortgage market has grown to become well-established, with the local and international lenders providing the expats with home loans.

Both buy to let mortgage, as well as a residential mortgage, is being offered to the expats in the UAE. The loan criteria, however, may differ from lender to lender and borrower to borrower.

Features & Benefits of Mortgage Loans UAE

Here is a quick rundown on the features & benefits of mortgage loans to see what makes them so popular amongst the UAE residents.

1. Many banks in the Emirates offer two kinds of mortgage loans- fixed and variable.
2. When the borrowers finance the purchase of their house through a mortgage, they tend to go in for a long-term commitment.
3. The deposit amount to be paid by the borrowers would vary, depending upon the situation and the specific property they wish to invest in.
4. The borrowers also have the option of re-mortgaging the loan if they want to. The term re-mortgaging refers to the change in the lender within the tenure of the loan so that the borrower can avail promotional rates or better loan options.
5. In the case of mortgage loans, the rate of interest is lower and the loan tenure is more flexible as opposed to personal loans.

Types of Mortgage Loan

In the UAE, one can get a mortgage on a variable rate or a fixed rate basis. The fixed terms are around usually around 5 years and can be as low as one year. When the fixed term ends, the deal is moved on to the variable rate of the bank.

A fixed-rate mortgage lets the borrowers have a surety about the repayment size for a particular amount of time. However, taking a variable deal in consideration would be a good idea in case the rate of interest seems to decline. The tenure of the loan is usually 25 years and the repayment will have to be done before turning 70 years old.

The table below shows the rates of interest of mortgage loans in the UAE.

Bank Name	Mortgage	Flat Rate	Reducing Rate
FAB	Islamic Mortgage Loan	Profit Rate-2.75%	Profit Rate-3.50%
FAB	Mortgage Loan	2.75%	3.50%
FAB	Mortgage Loan for Small Buildings	6.75%	-
Emirates NBD	Home Loans for UAE Nationals	3.04%	5.75%
Emirates NBD	Home Loans for Expats	3.04%	5.75%
Emirates Islamic Bank	Home Finance – Bina’a for UAE Nationals	1.75%	3.49%
Emirates Islamic Bank	Home Finance – Manzili	1.92%	3.49%
ADIB	Home Loans for UAE Nationals	Profit Rate-2.06%	Profit Rate-3.75%
ADIB	Home Loans for Expats	Profit Rate-2.06%	Profit Rate-3.75%
CBD	Mortgage Loan for Salaried	Profit Rate-2.18%	Profit Rate-3.54%
CBD	Mortgage Loan for Self-Employed	Profit Rate-2.18%	Profit Rate-3.54%
RAKBANK	Home In One	1.83%	3.49%
RAKBANK	Mortgage Home Loan	2.09%	3.99%
Mashreq Bank	Home Loan	2.99%	-
Standard Chartered Bank	MortgageOne	1.95%	3.53%
HSBC	New Home Loan	1.96%	3.59%
HSBC	Fixed Interest Rate Home Loan	3.59%	-

Who can Opt for a Mortgage Loan in the UAE?

The residents can obtain a mortgage in the UAE; however, they will have to meet an eligibility criterion.

• They must be working with their current employer for at least 6 months or one year, depending upon the rules of the lender and the area they are buying.
• The business of the self-employed borrowers should be running actively for a minimum of 2 years.
• An existing relationship between the borrower and the bank can also be beneficial as the bank will then be already familiar to your situation..
• Some lenders only accept the applications of those applicants who are working for specific companies. Therefore, people working for a banking institution, a multi-national company, or a government department may get to apply easily. However, if the employer is less-established or smaller, the applicants may have to struggle for availing the loan from the lenders even if they are creditworthy.
• It is necessary to have a good credit history while applying because the lenders tend to reject those applicants who have a poor credit report. Keeping this in mind, the borrowers should not apply for a mortgage till the time they have reviewed their credit report and repair the issues (if any)..
• For those who do not have a credit should opt for a credit card and pay it off monthly in full for building up a credit history.

Documents Required for Mortgage UAE

While applying for a mortgage, the required documents may differ depending upon the bank. The lenders may ask you to present the following documents.

• Emirates ID (for UAE Nationals)
• Passport (copy), residence proof in the UAE, and current address proof (for expats)
• Financial documents including bank statements, salary proof, trade license (for self-employed), etc.

Mortgage Loan: Step-by-Step Process

The following are the major steps to obtain a mortgage.

• Deciding whether to get a broker or directly approach the bank or apply online.
• Researching well to find the suitable kind of mortgage.
• Obtaining an agreement in principle through the lender and asking for an evidence letter.
• Looking for an ideal property that is well within the budget of the applicant and then making an offer.
• After the price has been decided, making payment of the deposit for confirming the purchase and determining the completion date.
• On the date of completion, funds will be released to the seller by the lender.

Mortgage Calculator UAE

Whether purchasing a new property or refinancing the existing home loan, looking for a suitable mortgage in the UAE can get confusing at some point in time. The wide range of options available from both international as well as local lenders adds more validation to the previous statement.

The cost of purchasing a property in the UAE can add up quickly, hence, it is important for the applicants to do detailed research for making sure that they can afford the charges and monthly payments.

Using a mortgage calculator will help them in finding out exactly what the monthly payments would be along with the fees they will have to bear while purchasing a property in the UAE.

In order to make all the calculations, the applicants have to enter the home price, down payment amount, rate of interest, and loan tenure in the calculator. The result shown will be the amount that the applicant will have to pay every month.

Repayment of Mortgage in the UAE

Repayment mortgages are amongst the major kinds of home loans in the UAE. They involve the payment of a set amount every month for the duration of the loan tenure. Generally, the payment will be done by setting the direct debit facility from the bank account of the borrowers on a particular date every month.

The interest-only mortgage is not very common. They involve the payment of only a part of interest every month, and then the payment of the entire principal amount when the term ends. Since the loans are risky, they are usually available only with 5-year tenures.