What you need to know about mortgages in the UAE

Mortgage lending in the United Arab Emirates (UAE) is becoming increasingly popular among citizens and residents looking to purchase property in this dynamically developing region. Unlike many other countries, including Russia, mortgages in the Emirates have their own unique characteristics that are important to consider when planning a home purchase.

Who can get a mortgage in the UAE?
Mortgages in the UAE are available to citizens and residents aged 21 to 65. The main requirement for obtaining a loan is an official salary of at least $2,200 for at least three consecutive months. This requirement allows banks to assess the borrower's financial stability and ability to repay the loan.

Mortgage Terms
Banks in the UAE offer a variety of mortgage terms, which may vary depending on the financial institution and the specific case. Key terms include:

- Down payment: Typically starts at 20% of the property value.

- Commissions: Include a standard commission of approximately 1% of the unit price, a Land Department fee of 0.25%, and a property valuation, which starts at $1,200.

- Interest rates: Typically range from 3.7% to 5%, making mortgages in the UAE relatively affordable compared to other markets.

- Loan term: The maximum mortgage term can be up to 25 years, but this depends on the borrower's age.

Preferential Programs

For first-time homebuyers, banks offer special preferential programs. These terms may include reduced interest rates or a minimum down payment, making the purchase process more affordable.

Mortgages for Existing Properties

It's important to note that in the UAE, mortgages are only issued for completed properties or properties that are at the key delivery stage. This differs from many other countries, where mortgages are available for properties under construction. However, it is possible to take out a loan for the final transaction under the developer's payment plan, which can amount to 40% to 50% of the apartment's value.

Mortgage or Installment Plan?

For non-residents looking to purchase property in the UAE, an alternative to a mortgage is installment plans. Installment plans are available for the purchase of residential complexes under construction and offer several advantages:

- Interest rate: Installment plans are often offered at 0%, making them more attractive to buyers.

- No fees: Unlike mortgages, installment plans do not incur additional fees, simplifying the process.

- Ease of application: Installment plans are generally less complicated and require fewer documents.

However, mortgages remain a profitable option for those living and working in the country due to their long terms and the ability to budget for the long term.

A mortgage in the UAE is a convenient and affordable way to purchase real estate for citizens and residents of the country. Knowing the basic terms and conditions, potential buyers can more informedly choose between a mortgage and installment plan, taking into account their financial capabilities and goals.