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    • UAE: How foreigners can get mortgage loans; minimum salary, age limit, documents – News
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    UAE: How foreigners can get mortgage loans; minimum salary, age limit, documents – News

    Harry Posted on

    With a thriving real estate market, UAE land is home to a variety of homes, from different types of apartments to villas, across all emirates. Off-plan properties have also become famous among the country’s residents in recent times.

    Home and mortgage loans are very popular among those who want to invest in real estate in the country. Foreigners are also eligible for mortgage loans in the UAE, provided they comply with certain requirements.


    From minimum salary requirements to repayment frequency, here’s how foreigners can get mortgage loans in the UAE.

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    Mortgage types

    • Fixed-rate mortgage: This type of loan offers a fixed interest rate for a specified period of time; This means monthly payments will be the same throughout the term. This period can be up to five years.
    • Short-term mortgage: A short-term mortgage is when borrowers go for a fixed-rate mortgage but for a shorter period of time, such as one to three years.
    • Long-term mortgage: Loans close to five years are considered long-term mortgages.
    • Variable rate: Variable rates vary depending on the rate offered by EIBOR in the selected period.

    odds ratio

    There are different rates that banks and financial institutions in the UAE use to calculate a borrower’s credit. This also helps individuals know whether they are eligible for a loan or not. These are as follows:

    Debt Burden Ratio (DBR)

    Debt Burden Ratio (DBR) is the ratio of the borrower’s total monthly payments to his or her total income.

    According to the Central Bank of the UAE, banks and financial institutions in the UAE are allowed to set a “maximum DBR of 50 percent of gross salary and any regular income from an identified and specified source at any time.”

    If the loan repayment schedule extends beyond the expected retirement age, institutions are required to ensure that the then-outstanding balance can be continued with a DBR of 50 percent of the borrower’s post-retirement income.

    If the property for which the mortgage loan is taken is for investment purposes, lenders will deduct at least two months’ rental income from the DBR calculation to assess the borrower’s repayment ability, taking into account non-rental periods.

    Loan to value ratio (LVR)

    The loan-to-value ratio measures the value of the loan relative to the value of the property. The maximum loan to value ratio for foreigners is as follows:

    • In the first home/owner occupier category, each borrower can only claim one property.
    • For a property valued at less than Dh5 million, the borrower can claim a maximum of 80 per cent of the value of the property.
    • For a property valued at over Dh5 million, the borrower can claim a maximum of 70 per cent of the value of the property.
    • For second and subsequent homes or investment properties, borrowers can claim 60 percent of the property regardless of value.
    • For off-plan properties, the maximum LTV of mortgages on the purchased property is 50 per cent, regardless of the purpose, value or category of the buyer. This is due to the long-term nature of the development process and the higher risk of completion.

    Suitability

    • Applicants must be at least 21 years old. In 2019, the Central Bank of the UAE eased some of the conditions for obtaining a home loan. This removed the pre-existing age 70 requirement on final mortgage repayment. The maximum age limit can now be set by lenders based on their risk management and policies.
    • The amendments had also changed the early or partial closing fee on home loans from 3 per cent to 1 per cent of the outstanding balance or Dh10,000, whichever is less. The reduction in rate will be a welcome benefit for customers and offer them greater affordability and accessibility.
    • Most banks require a minimum salary of Dh15,000.
    • Both salaried and self-employed people can apply for a housing loan.

    Required documents

    Banks in the United Arab Emirates may have different requirements when it comes to applying for a mortgage loan. Some of the basic requirements are:

    salaried individuals

    • passport copy
    • Emirates ID copy
    • salary certificate
    • Bank statements with a specified period, usually six months
    • Pay slips for a certain period

    Self-employed individuals

    • passport copy
    • Emirates ID copy
    • Trade license copy
    • bank statement
    • Association Memorandum
    • Audited company financial statements for a certain period

    Documents of the joint debtor

    • Passport copy of the joint debtor
    • Copy of Emirates ID
    • In certain cases and if applicable, the co-borrower may be asked to submit proof of income, proof of income, pay stubs, bank statement, MOA, and trade license.

    Important things you need to know

    • The maximum maturity of the mortgage loan is 25 years.
    • DBR cannot exceed 50 percent.
    • The maximum amount of financing allowed for foreigners is up to seven years of their annual income.
    • When it comes to repayments, customers must make their repayments out of their salaries or verifiable business or rental income. Debtors are not allowed to benefit from ‘End of Service Benefit’.
    • Refunds must be paid at least once every three months.
    • Except for mortgage loans with different principal repayments, principal and interest repayments must be made on a decreasing balance basis.
    • Housing loans with deferred principal repayment are only valid for investment loans. These loans do not allow non-repayment of principal for more than five years from the date of initial disbursement of the loan.

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