Myth #1: Foreigners cannot get a mortgage in the UAE
In fact, the UAE easily issues mortgage loans to foreigners, not only to residents of the Emirates but even to those who don't have a visa. In the second case, the conditions for obtaining a mortgage are stricter, and not all banks provide this service. But if you use the help of experienced lawyers who will help you choose a banking organization with the most lenient requirements, legally correctly form an application and prepare the entire package of documents, then you are likely to get approval.
Minimum requirements for exit certificate for goods foreign mortgage applicants:
- Age from 21 to 65 years (up to 70 years for self-employed residents)
- Passport
- Personal bank account statement (for the last 6-12 months)
- Income statement - the salary of employees should be at least AED 15K (USD 4K), and the average balance is AED 25K (USD 6.8K). The self-employed should have AED 25K (USD 6.8K) on their balance sheet, and they also need to prepare a package of documents from their country of residence, credit bureau reports and tax returns.
Non-residents must also provide a utility bill to confirm their residential address. The bank will require holders of a residency visa to present their Emirates ID.
Myth #2: Taking a mortgage in the UAE is unprofitable
There is a belief that UAE banks offer unfavorable conditions for foreigners to get a mortgage. Indeed, mortgage offers for UAE citizens are often slightly more attractive. But foreigners can also take out a loan here on comfortable terms - often more favorable than in other countries.
The mortgage rate in the Emirates, as in the rest of the world, depends on the Central Bank's key rate. As of August 2024, the key rate of the UAE Central Bank is 3.9% - significantly lower than in the CIS. Banks offer different mortgage programs: fixed, variable, or preferential rates are possible, and it also depends on the type and cost of real estate and other factors. On average, in August 2024, it is 5–7% for foreigners but can vary significantly. To choose the best option and not overpay in the end, you need to conduct a thorough analysis of conditions from different banks.
If in the future the key rate decreases or one of the banks offers more favorable conditions, you can easily refinance the loan.
Myth #3: Foreigners must make a large deposit
When buying a property worth up to AED 5M (USD 1.36M), the maximum mortgage amount is 85% of the property price for UAE citizens and 80% for residents. Accordingly, the initial payment should be at least 15% for local residents and 20% for residents. Similar conditions apply in many countries around the world.
When buying a property more expensive than AED 5M, the maximum amount of a mortgage loan is reduced by 75% for Emirati citizens and up to 70% for residents. Accordingly, the minimum down payment is increased to 25% and 30%.
Important! The amount of the initial payment may differ from the specified one — in addition to the recommendations of the central bank, a financial institution may introduce its own limits on the ratio of the loan amount to the value of real estate, based on the characteristics of the applicant.
Thus, the initial payment for citizens and residents of the UAE is almost the same. But for those who do not have a resident visa, it increases to 50%.
Myth #4: Renting is more profitable than a mortgage
Many foreigners who come to Dubai for several years prefer to rent housing, as they believe it is more profitable than a mortgage. In fact, it's enough to make a simple calculation to understand which option will suit you better.
Let's take as an example a one-bedroom apartment of about 60 sq. m. in Business Bay. As of the third quarter of 2024, the minimum cost of a move-in ready residence is AED 900,000 (USD 245,000), and the rental price is 12,500 (USD 3,400) per month.
If you have a resident visa, you will need to make a 20% deposit of AED 180,000 (USD 49,000), and the bank will give you a loan for the remaining AED 720,000 (USD 196,000). If you take a mortgage for 25 years at 7% (although you can find an option with a lower rate), the approximate monthly payment will be AED 6,800 (USD 1,900) - almost half of the rent. The monthly payment for a 9-year mortgage will be AED 12,000 (USD 3,300) - by paying about the same amount once a month as rent, in less than 10 years you will become the owner of your own home in Dubai. Given that the cost of rent increases every year, a mortgage is a more profitable option.
Conclusion
A mortgage in Dubai is a profitable and reliable way to finance the purchase of real estate. It is available to all foreigners, even those who do not have a UAE resident visa. To understand if this option is suitable in your particular situation, you need to conduct a thorough analysis of the market and offers from banks and calculate the upcoming expenses.