Property Management
8 Tips For Getting A Luxury Property Mortgage In Dubai
- Better Informed
- 28 Feb, 2023
With a 69% increase in transactions over AED 10m in 2022, Dubai’s luxury property market is booming. If you’re looking to buy a luxury property, whether it’s to live in or as an investment, you may need a mortgage to help finance your purchase.
Whilst securing a mortgage for a luxury property can seem daunting, there are steps you can take to make the process smoother and increase your chances of getting approved. Here are 8 tips to help you secure a mortgage for your luxury home in Dubai.
1 - Get your deposit ready
Regulations from the UAE Central Bank require ex-pats and non-residents to have a deposit of at least 20% of the purchase price (15% for UAE nationals) when buying a property under AED 5 million. For properties over AED 5 million, this increases to a 30% deposit requirement (25% for UAE nationals), or 35% when purchasing a second or subsequent property.
2 - Prepare your documents
To get a luxury property mortgage in Dubai, the bank will need to see a variety of documents from you, so make sure you have these to hand. The most commonly required documents include a copy of your passport, visa, Emirates ID, proof of salary (if employed), trade license (if self-employed) and bank statements. The bank may require other supporting documents to verify your employment, income sources and liabilities.
3 - Check your credit score
Banks will look at your credit score to assess your creditworthiness and how likely you are to repay your mortgage on time. If you have a track record of repaying your debts on time, you should have a good credit score, whereas a history of missed payments, mortgage defaults, and bankruptcy can be big red flags.
In the UAE, the Al Etihad Credit Bureau (AECB) is responsible for issuing credit reports. It’s a good idea to check your credit score from their website and then take steps to improve it if required.
4 - Boost your borrowing power
Lenders will look at your income, expenses, and debts to determine how much you can borrow. They will typically look at your income minus any debt repayments and expenses to understand what monthly mortgage repayment you can comfortably afford. Therefore, if you want to increase the amount that you can borrow, you should consider increasing your income, paying any outstanding debts and reducing your expenses.
5 - Consider the length of the mortgage
The length of mortgages varies, with the UAE permitting a maximum mortgage length of 25 years. A longer mortgage will reduce the monthly payment, but it will increase the amount of interest that you pay over the length of your mortgage. It's important to consider the mortgage length that is most suitable for you.
Are you comfortable with a higher monthly payment to pay less interest and pay off your mortgage sooner, or would you prefer the flexibility of a smaller monthly payment over a longer period?
6 - Understand the costs involved
The deposit isn’t the only upfront money you’ll need to buy a luxury property in Dubai. There are also a number of fees to consider, including legal, registration, and property valuation fees. Make sure you factor these costs into your budget when calculating how much you can afford to borrow.
7 - Speak to a mortgage broker
If you are looking to get a mortgage for a luxury home in Dubai, we would strongly recommend speaking to an experienced mortgage broker. A mortgage broker will give you specialised market and financing knowledge, access to exclusive rates, and step-by-step support which covers the buying process, fees, timescales and borrowing limits.
8 - Get pre-approval
Mortgage pre-approval is where you’ve been approved by a lender for a mortgage up to a certain amount. It is a very good idea to get pre-approval prior to starting your property search. This will give you a clear idea of how much you can afford to borrow, and your budget for finding a property. Having pre-approval in place also shows sellers that you are serious and can afford to purchase the property, making them more likely to accept an offer from you.
Get market-leading mortgage advice
Securing a mortgage for a luxury property in Dubai requires careful planning and preparation, and it’s strongly recommended that you have an experienced mortgage advisor by your side.
