Dubai has emerged as a global hub for business, leisure, and luxury. Its impressive skyline, world-class amenities, and strategic location have made it a popular destination for people from all over the world. With its diverse population, Dubai has become a melting pot of cultures, languages, and nationalities. As a result, the demand for real estate in Dubai has been steadily increasing, and many non-residents are looking to invest in property in the city.
If you are a non-resident looking to buy property in Dubai, you may be wondering how to finance your purchase. Mortgages are one option that can help you realize your dream of owning property in Dubai. In this comprehensive guide, we will explore everything you need to know about mortgages in Dubai for non-residents in 2023.
What is a mortgage?
A mortgage is a loan that is used to finance the purchase of a property. The borrower agrees to pay back the loan over a set period, usually between 15 and 30 years, and the property serves as collateral for the loan. Mortgages can be obtained from banks or other financial institutions, and the interest rates and terms of the loan can vary depending on the lender and the borrower's creditworthiness.
Mortgages for non-residents in Dubai
Dubai has a robust real estate market that attracts investors from all over the world. However, obtaining a mortgage in Dubai can be challenging for non-residents. Banks in Dubai have become more cautious in lending to non-residents, especially since the outbreak of COVID-19. Nevertheless, some banks still offer mortgages to non-residents, and it's essential to understand the requirements and qualifications.
To qualify for a mortgage in Dubai as a non-resident, you will typically need to have a higher down payment than residents. The down payment for non-residents is usually around 35% of the property's value, while residents can expect to pay around 25%. Non-residents will also need to have a good credit score and provide a range of documents, including a passport, proof of income, and proof of residency in their home country.
Types of mortgages in Dubai
There are several types of mortgages available in Dubai, and the type of mortgage you choose will depend on your financial situation and investment goals. Here are some of the most common types of mortgages available in Dubai:
- Fixed-rate mortgage: A fixed-rate mortgage is a type of mortgage where the interest rate remains the same throughout the loan's duration. This type of mortgage provides certainty and predictability in your monthly payments, making it easier to budget.
- Variable rate mortgage: A variable rate mortgage, also known as an adjustable-rate mortgage, is a type of mortgage where the interest rate fluctuates based on market conditions. This type of mortgage can be riskier as your monthly payments can increase if interest rates rise.
- Islamic mortgage: Islamic mortgages are designed for customers who want to buy property without paying interest. Instead, the bank purchases the property and sells it to the customer at a higher price, allowing the customer to pay back the loan over time without interest.
- Interest-only mortgage: An interest-only mortgage is a type of mortgage where the borrower only pays the interest on the loan for a set period, usually between 5 and 10 years. After the interest-only period ends, the borrower will need to start paying back the principal and interest.
Tips for getting a mortgage in Dubai
Getting a mortgage in Dubai as a non-resident can be challenging, but there are several tips that can help make the process smoother. Here are some tips to keep in mind: Work with a reputable mortgage broker: A mortgage broker can help you find the best mortgage rates and terms and guide you through the application. At Nu Mortgage we collaborate with the top banks in the UAE to offer our clients a diverse selection of mortgage products. We are committed to helping you comprehend your borrowing alternatives, which is why we provide an easy-to-use mortgage calculator. With our Dubai mortgage calculator, you can estimate your monthly mortgage payments and determine the maximum amount you can borrow. Our calculator factors in critical components such as down payment, interest rate, and other relevant factors to provide you with a precise projection of your monthly payments. Try our mortgage calculator today and take the initial step towards owning a home in the UAE.
What are the requirements to obtain a mortgage in Dubai as a non-resident?
To obtain a mortgage in Dubai as a non-resident, there are certain requirements that you must meet. These include:
- A minimum down payment of 25% of the property value: Non-residents are required to make a down payment of at least 25% of the property value to be eligible for a mortgage. Some banks may require a higher down payment, so it's important to check with the lender before applying.
- A valid residence visa: Non-residents must have a valid UAE residence visa to be eligible for a mortgage. The visa must be valid for a minimum of six months at the time of application.
- A minimum salary requirement: Non-residents must meet the minimum salary requirement set by the lender. The minimum salary requirement varies between banks and can range from AED 10,000 to AED 50,000 per month.
- A good credit score: Non-residents must have a good credit score to be eligible for a mortgage. The credit score requirement varies between banks, but generally, a score of 700 or above is considered good.
- Employment stability: Non-residents must have a stable employment history and should have been working in their current job for a minimum of six months.
What documents are required to obtain a mortgage in Dubai as a non-resident?
To obtain a mortgage in Dubai as a non-resident, you will need to provide the following documents:
- A copy of your passport and residence visa.
- Proof of income: Non-residents will need to provide proof of income, which can include salary certificates, bank statements, or income tax returns.
- Proof of employment: Non-residents will need to provide proof of employment, which can include a letter from their employer or a copy of their employment contract.
- Proof of address: Non-residents will need to provide proof of their address in their home country, which can include a utility bill or a bank statement.
- Property documents: Non-residents will need to provide the property documents, including the sale and purchase agreement and the title deed.
What are the fees and charges associated with obtaining a mortgage in Dubai as a non-resident?
When obtaining a mortgage in Dubai as a non-resident, there are various fees and charges that you will need to pay. These can include:
- Mortgage registration fee: This is a fee that is charged by the Dubai Land Department for registering the mortgage. The fee is 0.25% of the mortgage amount.
- Valuation fee: This is a fee that is charged by the lender for valuing the property. The fee can range from AED 2,500 to AED 5,000 depending on the property value.
- Processing fee: This is a fee that is charged by the lender for processing the mortgage application. The fee can range from AED 2,500 to AED 5,000 depending on the lender.
- Early settlement fee: This is a fee that is charged by the lender if you pay off the mortgage before the end of the term. The fee can vary between lenders.
- Insurance fees: Non-residents are required to take out property insurance and life insurance. The cost of these insurance policies will depend on the lender and the value of the property.
What are the benefits of obtaining a mortgage in Dubai as a non-resident?
There are several benefits to obtaining a mortgage in Dubai as a non-resident, including:
A lucrative Investment opportunity: Dubai's real estate market is known for its high returns on investment, making it an attractive option for non-residents looking to invest in property.
Flexible repayment terms: Non-residents can choose from a range of repayment terms, allowing them to tailor a mortgage to their circumstances.
Selecting a Property and Make an Offer
Once you have determined your budget and obtained a pre-approval letter from the bank, it's time to start looking for a property. Dubai offers a variety of options, including apartments, villas, and townhouses, in various locations throughout the city.
Working with a reputable real estate agent can make the process of finding your dream property much easier. They can provide you with a list of available properties that meet your criteria, arrange viewings, and even negotiate the purchase price on your behalf.
Once you have found a property that you want to purchase, you will need to make an offer. The offer should be in writing and include the purchase price, any contingencies, and the expected closing date. The seller will then review the offer and either accept it, reject it, or make a counteroffer.
Finalize the Mortgage
If your offer is accepted, you will need to finalize your mortgage with the bank. This will involve providing additional documentation, such as proof of insurance and a valuation report, and signing the mortgage agreement.
Once the mortgage is finalized, the closing process can begin. This involves transferring ownership of the property from the seller to the buyer, paying any outstanding fees and taxes, and registering the property with the Dubai Land Department.
Closing costs can vary depending on the value of the property and the terms of the mortgage, but they typically range from 4% to 7% of the purchase price. These costs may include property registration fees, real estate agent fees, and transfer fees.
Once all the necessary paperwork has been signed and the closing costs have been paid, you will receive the keys to your new property. Congratulations, you are now a homeowner in Dubai!
Buying a property in Dubai as a non-resident can be a complex process, but with the right support, it can also be a rewarding experience. At Nu Mortgage, we are committed to providing our clients with personalized service and exceptional support, so that you can achieve your homeownership dreams in Dubai. Visit Nu-Mortgage.com today to learn more about our services and how we can help you find the right mortgage for your needs.
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