How Property Mortgage Works in Dubai

By Rocky Real Estate

How Property Mortgage Works in Dubai

Are you planning to buy a real estate in UAE particularly, in Dubai? If yes, then chances are that like most people you would like to take a loan or mortgage against the property you are planning to purchase.

In this article, you will learn how property mortgage works, the different types of mortgage interest rates, and the conditions that affect your mortgage.


What is a property mortgage?

A property mortgage is an agreement between a borrower and a lender. If you plan to buy Dubai properties and you don’t plan to invest the full amount, then one option would be getting a property loan.

In Dubai, usually, you would need a 20% deposit of the contract price of the property. The bank lends you the remaining 80% of the contract price. You will then pay the borrowed amount with interest on a monthly basis. The term of the loan may last from 5 to 30 years, depending on your agreement with the lender.


Types of mortgage interest rate

One of the most important factors you need to consider when getting a loan is the interest rate. The two most common types of interest rate in home loans are fixed rate and variable rate.

Fixed rate, as its name suggests, allows you to have the same interest rate for the whole duration of your loan term. Its main advantage is that you don’t have to worry about the market’s behavior. Not only that, but budgeting and forecasting your expenses would be much easier with a fixed interest rate.

On the other hand, variable interest rate means that the interest rate of your home loan may change regularly, typically, on a yearly or half-yearly basis. Variable interest rates increase or decrease depending on how the real estate market behaves. Variable interest rate can be advantageous when the average interest rate decreases. However, if market prices rise, then your interest rate will also increase.


How does a mortgage work in Dubai?

When it comes to mortgage rates, there are two factors that primarily affect how much money you would need as your deposit. First is your nationality. For UAE locals, they can apply for a mortgage with a deposit of 20% or below of the contract price.
Expats can only apply for a maximum loan value of 75%. This might change depending on the developers’ ability to agree on terms with selected lenders/banks.

Another factor that affects your mortgage rate and how you buy Dubai real estate is whether you are buying a ready for occupancy property or not. In most cases, if you are buying a property which is under construction, you can only apply for a 50% home loan. This figure can reach 75% when buying a finished property with title deed.


Seeking professional help

If you want to learn more about how to buy a property such as apartments in Dubai through a home loan, you would need expert advice. Thankfully, you can make a better choice with the help of Rocky Real Estate. They have the unmatched knowledge, skills, and network to help you find the best property for you. They also have the necessary experience to assist you in every step of acquiring your property. Give them a call now!