Decoding the Mortgage Process for First-Time Buyers

If it’s your first time engaging in mortgage processes and buying a home and you’re based in the UAE, listen up. Decoding the mortgage process for first-time buyers in the UAE can get a bit tricky. But once equipped with the right information, you’ll be on your way to making a smart personal investment.

How APR Percentage is calculated

The APR rate of a mortgage is a combination of upfront fees and the monthly interest paid. In a given month, the interest payment and the upfront fees are divided by the loan balance remaining at the end of the previous month. This rate is called the APR.

How Nationality Affects Buying Power

The nationality of a buyer is taken into account when a mortgage is lent in the UAE. Ex-pats are grouped into two different categories, non-GCC Arab nationals and GCC Arab nationals. Both of these groups are also separate from UAE citizens when it comes to securing a mortgage.

GCC Arab nationals are nationals of the Gulf Cooperation Council made up of the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman. Buyers in this group enjoy less strict buying rights. Whether you are foreign or locals, you can just click on this website to find out more by just clicking here on “hard money lenders near me.”

Alternatively, all non-GCC Arab Nationals are limited to only five property purchases.

Down Payment Requirements 

If you’re an ex-pat, your deposit for your new home will be different from that of a UAE national. For example, if you’re purchasing a property valued at $1,360,000 (4,994,600 AED) or less, you will have to pay a required 25 percent down payment for the property. In this case, your down payment would be $340,000 (1,248,854 AED).

If the property is valued at more than the price above, a required deposit of 35 percent is expected.

However, these rates are only applicable to the first purchase you make. The minimum deposit required for an additional property is 40 percent.

Mortgage Rules & Regulations 

Getting a mortgage for an established property versus a new development that is still under construction is a bit different. If you are going to private properties, perhaps you can check out private money lenders for real estate for more options on loans.

For example, if you’re interested in purchasing a development property that isn’t complete yet, you will have to pay a minimum deposit of 50 percent of the total purchase price and provide proof to the financial institution that you are able to provide this to the seller.

Required Documentation

Also, keep in mind that depending on your line of work and nationality, different sets of documents are required before a mortgage can be offered and these must be attached to a Credit Reference Agency Report that is only valid for 30-days.

Non-residents have to provide six months of banking statements. 

Self-employed buyers must provide a description of their type of business, copies of audited financial accounts from within the last two years, or two years’ worth of tax assessments.

Salaried buyers need to provide the following documents, which cannot be older than 18 months:

• Original salary certificate or three months’ worth of pay stubs
• Letters from your employer about bonus pay records (3 years) and commission pay (2 years).