Best mortgage providers in the UAE

This article will speak about some of the best mortgage providers in the UAE, after I previously discussed the best mortgage providers in the UK.

Whilst I have previously looked at stocks vs property and if renting is dead money, this article will examine the issue of mortgages in the UAE in more detail.

It will include the best mortgage providers for expats and locals in the country.

If you are looking to invest in a portable way as an expat, please contact me using  this form, or by using the WhatsApp function below.

Introduction

A mortgage is a type of loan secured by real estate. When you get a mortgage, your lender takes collateral on your property, which means he can take the property if you don’t pay off the loan.

A mortgage is the most common type of loan used to buy real estate, especially residential.

A mortgage is considered a relatively safe loan for lenders because the lender can take the property if you do not pay.

As long as the loan amount is less than the value of your property, your lender’s risk is low. Even if they default, they can strip you of the foreclosure and get your money back.

A mortgage is much like other loans: The lender gives the borrower a certain amount of money for a specific period, and it is returned with interest.

However, mortgages are also slightly different from other types of loans because mortgages are loans secured by real estate. This means that the loan is secured by real estate, so the lender gets lien and can foreclose you if you fail to make payment.

Each mortgage has certain conditions that you should be aware of:

  • Loan amount. This is the amount of money that you borrow from your lender. Typically, the loan amount ranges from 75% to 95% of the purchase price of your property, depending on the type of loan you are using.
  • Credit term. The term is the time within which you must pay off the loan. The most common mortgage loan terms are 15 or 30 years.
  • Depreciation. It is the process by which you pay off your mortgage over time, and it includes payments of both principal and interest. In most cases, loans are fully amortized, which means that by the end of the term the loan will be fully repaid. However, if your mortgage is not fully amortized (for example, if it has a pop-up payment at the end), the amortization may be longer than the term.
  • Interest level. The interest rate is the cost you pay to receive a loan. For mortgages, rates are usually between 3% and 8%, with the best rates available for home loans to borrowers with a credit rating of at least 740.
  • Points. Mortgage points are commissions that you pay upfront in exchange for a reduction in the interest rate on your loan. These fees allow you to save on interest over the life of the loan. Not all mortgages are awarded with bonus points, so it is important to check the terms of the loan.
  • Frequency of payments. The number of payments you make per year (usually 12) affects the amount of your monthly mortgage payment.

Who usually requests for the mortgage?

Individuals and businesses use mortgages to make large property purchases without paying the full purchase price in advance. Over the years, the borrower pays off the loan plus interest until she or he becomes the owner of the property free of charge and in its pure form. Mortgages are also known as “property pledges” or “property claims”. If the borrower stops paying the mortgage, the lender can revoke the foreclosure. They are a form of disembodied law.

In a home mortgage, a home buyer pledges his home to a bank or other lender who has a claim on the home if the home buyer fails to pay off the mortgage. In the event of foreclosure, the lender can evict the tenants of the house and sell the house, using the proceeds from the sale to pay off the mortgage.

Mortgages in the United Arab Emirates

The United Arab Emirates is becoming an increasingly popular destination for expats, especially in business-friendly areas such as Dubai and Abu Dhabi.

Recognizing this trend, the UAE mortgage market is now well established, with international and local lenders offering home loans to expatriates. Foreign nationals residing in the UAE are eligible for mortgages and foreclosures, although their criteria differ.

Who can get a mortgage in the UAE?

Foreign buyers can get a mortgage in the United Arab Emirates, but must meet certain criteria. You will need to have worked in your current job for at least six months or a year, depending on the area you are buying from and your lender’s rules.

Self-employed borrowers will need to run their business for at least two years. It can also be helpful to have an existing relationship with the bank, as it will be familiar with your circumstances.

One of the system’s biggest quirks is that some banks only accept candidates who work for companies. This means that if you work for a government office, banking institution, or international company, you are unlikely to have any problems.

However, if your employer is less reputable, it may be difficult for you to get a loan from some lenders, even if you are creditworthy.

It is also important to have a clean credit history when applying, as lenders tend to reject candidates with poor or non-existent credit files. With this in mind, you should not apply for a mortgage until you have checked your loan file and fixed any issues.

If you have never had a loan, you may want to consider taking a credit card and repaying it in full each month to build up your credit history. 

Types of mortgages in the UAE

Mortgages in the UAE are available with a fixed or variable rate. Fixed periods are usually around five years, although they can be less than one year. After the expiration of the specified period, the transaction goes to the variable interest rate of the bank.

Fixed rate mortgages give you confidence in your payments over a period of time, but it is worth considering a variable rate deal if interest rates are likely to decline. The terms are usually set at 25 years and the loan usually needs to be repaid before the age of 70.

As you may guess, in this article we will discuss the mortgage lending system in UAE, and also present you a list of some of the best mortgage providers with each one’s characteristics. So here is a quick list of the financial institutions that also offer mortgages of different sizes and interest rates, about what we will talk in this article:

  • Standard Chartered Mortgage One
  • RAKBANK Home in One
  • CBD Personal Loan
  • Emirates Islamic Manzili Home Finance
  • United Arab Bank Home Finance for UAE National 

As you can see, the choices are endless. This gives you tremendous freedom in choosing the best option, one which will suit your long-term plans as well as your future plans, now let’s discover these options.

  1. Standard Chartered Mortgage One

The first one on our list is from Standard Chartered. Standard Chartered is one of the most renowned banks in the world, offering the best rates and opportunities available.

Under their Mortgage One scheme, the cut rate is around 3.49% and the flat rate is 2%. The fixed rate fluctuates somewhat for about 25 years, which is the maximum period, but it will always hover around the 2% mark.

The advantage of getting this loan is that it will have a shorter duration, as most of the payment goes towards principal rather than interest.

However, there is a minimum wage of AED 10,000. The down payment can be around 20% of the property value and the bank offers up to AED 18 million.

For those of you looking for property in Abu Dhabi, Dubai and Ras Al Khaimah and their surroundings; this should be your first choice.

Who will benefit from Mortgage One?

Overall, the Mortgage One loan structure is most suitable for people who have additional funds in the short term.

This may be due to the fact that they wait for the time to come before using the cash for any purpose, maybe as capital for starting a business, investing in a private company, paying for another house, etc.

Depositing funds into a fixed deposit account can limit a customer’s ability to withdraw funds … unless they are willing to incur penalties that would have made it meaningless in the first place.

By keeping cash in a Mortgage One account when funds are still “free”, these categories of borrowers can easily offset the interest on their home loans, and when it comes time to withdraw money, they can easily take the money somewhere. The rest is for its intended purpose.

This process will be hassle-free as the system is configured to make it easy for customers to manage these changes.

Otherwise, if the focus is on the return on earmarked funds, borrowers may find better alternatives elsewhere in the form of fixed deposits, structured deposits, or even insurance products.

  1. RAKBANK Home in One

Less known outside of the UAE, RAKBANK Home in One offers a combination of checking account and home financing.

Loan interest is calculated daily and you can withdraw your money at any time. The reducing rate is 3.24% and may fluctuate over the maturity period.

The minimum wage requirement is AED 15,000 and there is virtually no limit on the amount you can receive. A mortgage can be obtained for up to 25 years and you can purchase any property in Dubai, Abu Dhabi and RAK.

The only condition is that the property must be ready and you can only purchase property under construction in Dubai.

Other features that you will get by using this mortgage provider are:

  • A single account is provided for the mortgage payments that can be used as a current account
  • The interest rate will not be constant. It will be reduced depending on the monthly deposits
  • Both UAE Nationals and Expats can avail Home in One loan
  • Quick and hassle-free documentation
  • Fixed rate of 1.92% is charged for the Home in One loan
  • The loan is provided for an interest rate of 3.49% on reducing rate basis
  • Salary transfer is not mandatory
  • Finance is provided on the maximum tenure of 25 years
  • Processing fees of 1% are applicable
  • Maximum finance of AED 18000000 is provided bbhh
  • For Expats down payment of 25% is required and for UAE Nationals down payment of 20% is required
  • 1% of the loan amount is charged as early settlement fees
  • Interest rates are based on EIBOR
  1. CBD Personal Loan
CBD Logo

If you are an expat and looking for the best mortgage loans to help you buy the home you’ve been dreaming of, then this is it. The CBD offering is very lucrative.

The Commercial Bank of Dubai (CBD) has over 25 branches and hundreds of ATMs across the Middle East. Commercial Bank of Dubai personal loans are offered by keeping the financial needs of the UAE residents in mind. 

From household appliances and travel expenses to education bills and more, the Commercial Bank personal loan allows loan borrowers to avail of immediate funding for much-needed financial crunch at an affordable interest rate of 5.50% for a flexible tenure of up to 4 years.

The only problem is that this mortgage is available if the project has already been completed. If you’ve waited so long to buy a home, this option is by far the most economical.

The Commercial Bank of Dubai offers a large loan of AED 3 million for UAE citizens and up to AED 750,000 for foreign nationals. This loan amount can be quickly and safely used through the online application for a personal loan from the Commercial Bank.

If necessary, the borrower can also take advantage of the top-up of a loan for individuals at the Commercial Bank of Dubai. This allows the borrower to increase the existing loan amount at preferential interest rates and terms. In addition, borrowers can also transfer a personal loan from other banks (with or without replenishment of the loan amount).

A personal loan borrower from Commercial Bank of Dubai receives a free CBD debit card along with a checking account waiver of the required minimum balance. In addition, they can defer a certain number of loan payments. Deferring the loan is very useful in the event of unforeseen events as a result of which the loan holder cannot pay his installment.

  1. Emirates Islamic Manzili Home Finance

Islamic Bank Emirates offers one of the lowest mortgage rates: a flat rate of just 1.81%, adjusted for 25 years and about 3.2% per annum.

There is also a minimum wage requirement of just over AED 15,000. You also get a credit card when you choose this mortgage option and a two month grace period. You also need to be an employee for just over 6 months to choose this mortgage.

You can get up to AED 20 million in mortgages that will need to be paid back over 25 years. This offer also comes with a two month grace period, which is good and can be used every year. Here are some useful features that this mortgage provider offers:

  • Variable rate option starting from 3.42% p.a.
  • 1% Processing Fee (0% processing fee for buy-outs)
  • 60 days installment deferment available
  • Low rate on Life Takaful
  • Automatic Enrollment in priority banking
  • Pre-approved Credit Card
  1. United Arab Bank Home Finance for UAE National 

The last one on our list is the United Arab Bank. If you are an Emirati citizen looking for the most effective mortgage, then UAB Home Financing is your best choice.

With a low fixed rate of 1.69% for 25 years and a reduced rate of 2.99%; for any of you looking to buy a new villa or invest in real estate, this is the only option.

However, you need to have a minimum wage of AED 15,000, and for self-employed people, AED 50,000.

You can receive up to AED 10 million and purchase any property in the Emirates with title. This flexibility allows you to invest in the widest range of opportunities that you believe will pay big dividends.

You also get a pre-approved credit card when you choose the mortgage option, and also a lot of features:

  • This product can be obtained in both conventional and Islamic 
  • For your first property, the down payment is 20% if the property value is under AED 5M and 30% if property value is above AED 5M. For your second property, the down payment is 35%. For self-construction, the down payment is 50%.
  • The maximum loan amount is 80% of property value. Repayment period of 25 years
  • You require a minimum salary of AED 15,000 for UAE nationals, AED 20,000 for expats, an AED 50,000 for self-employed per month to be eligible.
  • It is not a requirement to transfer your salary to apply.
  • The processing fee is 1% of the finance amount.
  • The early settlement fees are 1% or AED 10,000, whichever is lower, whether paid through own source or by another bank.
  • There is a life insurance fee of 0.40%.
  • The rate is fixed for up to three years. Thereafter the bank charges a variable rate based on the UAB Retail Base Rate (RBR).
  • The reducing rate of this finance is 3.69% and the equivalent flat rate is 1.93%. The calculation used is a division of the reducing rate by 1.911 and this is indicative only.
  • Loans offered on all completed properties across Emirates in the UAE with title deed.

So here are some of the best mortgage lenders in UAE, who can help you actualize all your financial goals and plans. But below let us tell you some benefits of borrowing a mortgage.

Mortgages make home ownership affordable:

Buying a home will probably be the biggest purchase you will ever make, and a mortgage will be your biggest debt. Since you can spread your home loan payments over many years, the amount you pay each month will become more manageable and affordable!

Traditionally, when people take out their first mortgage, they tend to choose a term of 25 years. However, there are no rules on this and as we live longer and the retirement age rises, 30-year mortgages are becoming more common. This can help lower your monthly payments, but on the other hand, you will be saddled with debt for longer.

Choose the shortest term you can afford – not only will you get out of your mortgage faster, but you will also save thousands of pounds in interest. And don’t forget that when re-mortgaging and switching to a new product, you shouldn’t choose another 25 or 30 years.

A mortgage is an economical way to get a loan:

Mortgage interest rates are generally lower than any other form of borrowing because the loan is secured against your property.

This means that the bank or building society has the confidence that if things go wrong and you can’t pay it back, there will still be something of value – your property – to sell to pay off some, if not all, of the mortgage.

Mortgage interest rates are constantly changing – over the years they have been above 15% and below 2%.

Fixed rate mortgages and rate tracked mortgages tend to be the most popular, but there are also discount and offset mortgages and products aimed at new buyers and landlords. Our guide to the different types of mortgages explains them in more detail.

Mortgages, perhaps more than any other loan, involve many variables, starting with what should be paid off and when.

Home buyers need to work with a mortgage specialist to get the best deal for what can be one of the biggest investments of their lives. Anyways mortgages are and will be one of the best ways to reach your expensive goals and invest in your future.

Further Reading

The day of the “lifetime expat” where somebody moves overseas and stays in one country for decades is largely gone.

Therefore, what’s the best investment for expats, in an age where people are more likely to move around, or indeed repatriate home?

That is the topic of the article below.

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