A home loan guide for expats to the UAE

  • A home loan guide for expats to the UAE

    home loans in uae

    Welcome to the UAE, the land of sun, sand, and the promise of a better life. But to build a future here you first need a place to stay. Thanks to the flexible and affordable home loans that the UAE has to offer, it has never been so easy for an outsider to buy your own house. Here’s a step-by-step guide to help you apply for and get a home loan or mortgage to turn your dreams into reality.

    What is a home loan?

    A financial instrument through which you can borrow money from the bank to buy a property. In the UAE, a home loan or mortgage is also called home finance. The money you get from the bank has to be returned by way of equated monthly installments (EMI)s over a period of time along with the interest charged by the bank.

    How do you get a home loan in the UAE?

    For that, you should first start by calculating your earnings and the amount you can repay as EMIs. You can do that by simply using the home loan calculator. It will give you a basic idea. For further details, the banks are always there to help.

    What are the requirements for a home loan?

    One of the most important factors on which the loan amount will depend is your salary, or if you are a business person, then your annual turnover. Banks will check your viability to repay and will fix the loan amount, the rate of interest, and the duration of the loan. Go for the bank which has the lowest home loan rate and one that suits your budget.

    How much does the bank provide as a home loan?

    While the minimum down payment varies as per the property price, banks usually give 75% of the total unit cost. The rest of the down payment must be borne by you.

    What are the different types of home loans available in the UAE?

    Banks provide different types of home loans, each with its own rate of interest. Here’s a lowdown on the different home loan rates you can avail:

    • Fixed-rate of interest: Here you can settle for a pre-determined rate of interest as part of the EMI for the entire duration that the loan has to be repaid. This is a basic option and one which doesn’t get determined by market fluctuations.
    • Variable-rate of interest: In this type of home loan the rate of interest varies as per market dynamics. In case of a downward swing in the market or owing to certain changes in regulations, the interest rate might come down. The opposite is also true when the market goes up. While you can benefit from a lower rate of interest, you might have to pay more in case the interest rises.
    • Discounted rate of interest: In this type of loan you are offered a discount of certain percentage points by the bank for a limited period of time. But be sure to check the amount you will have to repay after the discount period ends. It could be on the higher side.
    • Capped rate of interest: Here again the rate of interest is not fixed. But then you and the bank can agree on a maximum rate of interest before the start of the loan period. That way, market fluctuations won’t affect your rate of interest in case it goes higher than the pre-determined rate.
    • Re-mortgage or top-up: Here you can take out a second loan while paying the EMI on an existing loan.
    • Offset mortgage: It helps you to connect your loan account with your savings and credit card accounts. So, whenever you have some money to spare, you can deposit it in your loan account and it will bring down your total interest.

    What are the eligibility criteria required for a home loan?

    There are certain conditions that an outsider has to meet to be eligible for a home loan in the UAE:

    • You should have been in your current job for a period of at least six months to one year
    • If you are a business person, the business should be operating for at least two years
    • Your credit history should be clean, for that will get you a home loan faster
    • In case you do not have a credit card, you should get one and make sure you do not default on your monthly credit card bill payments

    What are the documents required for a home loan?

    Following is a list of documents needed by an expat to apply for a home loan in the UAE:

    • Salary proof
    • A copy of your passport
    • Proof of residency in the UAE
    • Bank statement for the last 3 to 6 months
    • Current address proof
    • Trade license if you are a business person

    What is in-principle agreement of home loan?

    It is a pre-approval on your loan given by the bank based on your financial status. It will help you narrow down on a property that fits the budget. The loan will be provided once the bank verifies all the documents.

    Should I go for property insurance once I have a home loan?

    In the UAE, it is mandatory to have property insurance while taking a home loan. It gives you a safety net in case of future loss. One can buy the insurance together with the home loan or separately.

    Can you switch banks in the middle of an existing home loan?

    Absolutely. Every day banks are coming up with competitive home loan rates to attract customers. In case you find a better deal than the existing home loan, you can go for it. All you need to do is speak to the bank and the person there will guide you on the rest of the modalities.

    Which bank offers the best home loan rates?

    Here are some of the banks offering the best home loan rates:

    • HSBC
    • Mashreq
    • The Commercial Bank of Dubai (CBD)
    • The United Arab Bank (UAB)
    • Emirates Islamic

    Quick recap

    Finally, let us take a look at some of the major things you, as an expat, will need to keep in mind while applying for a home loan in the UAE:

    • Select a property you wish to buy according to your budget
    • Choose a bank you think is offering the lowest rate
    • Pick a rate of interest that suits your pocket
    • Keep your documents in order and get an in-principal approval from the bank
    • Pay the initial down payment to the builder
    • The bank will then process your request and your loan amount will be disbursed

    Check out our Loan Mortgage Calculator

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