How to get a Mortgage in Dubai? (The Ultimate Guide)

Mortgage in Dubai – Process, FAQ, Laws etc

In simple terms, mortgage is a loan taken to finance purchase of property.

The property can be a residential (home) or commercial property (office spaces, warehouse etc). Because your property is mortgaged to the bank or the financial institute, it is called a Mortgage. Mortgage is interchangeably called Home Loan if it is for a residential property. In Islamic finance, mortgage is works in similar to that in conventional banking, but the mechanisms and certain terms are different.

WARNING: Note that home loan or mortgage is a long term commitment in terms of repayment. You must be absolutely sure about taking on this as liability. Also consider that buying may be easier; when you do want to sell it may not be an easy task!

dubai morrgage home loan

The process of obtaining a mortgage in Dubai:

So you have decided to buy your home in UAE. Most of the property transactions happen in Dubai and Abu Dhabi. Dubai has some of the best residential and office spaces available. If you are loaded with cash, perhaps you may not require a mortgage. However, if you would like to take a loan towards your new apartment or a new office, you will need to get a mortgage from a commercial bank or finance company in UAE. Before we get into the process of mortgage, it is better to know your eligibility as per UAE Central Bank.

UAE Central Bank has stipulated different rules for Expats and UAE Nationals when it comes to the LTV (Loan to Value – The value of loan against the price of the property).

Before the great economic depression that affected the region in 2008 and following years, Banks and Finance Companies were liberal in offering very low down payment requirement. In some instances the requirement was as low as 5%. However, since those times, there has been a prudent approach by Central Bank with new rules:

Dubai Mortgage Down payment:

Currently there is no exception to payment of down payment requirement. Central Bank of UAE has made it mandatory for mortgage applicants to contribute their portion of payment. No one can give exception here. Below table and information will provide you more details on downpayment for mortgage:

Maximum LTV (Loan to Value) for Ready Properties for Expatriates (both freehold and leasehold properties):

  • 75% LTV for property value of AED 5 million and below;
  • For property above AED 5 million the LTV is 65%;
  • LTV for the second home or investment property is up to 60%

Example: If the property value is AED 1 million, bank will finance maximum of AED 750,000 subject to eligibility. If the property price is AED 5 million, the bank will finance AED 3.25 million (subject to eligibility).

Maximum LTV for Ready Properties for UAE Nationals (both freehold and leasehold properties): 

  • 80% of the property value for property value of AED 5 million and below;
  • 70% of the property value for property value of AED 5 million and above;
  • For second property, LTV can be maximum of 65%.

How about Off plan properties?

For off plan properties, for both expats and UAE nationals, the maximum LTV offered is 50% of the property value.

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Who is eligible for Mortgage?

If you are employed in UAE, or are a businessman (self employed) you may apply for mortgage with the financials institutes.

Mortgage for Non residents:

If you are a Non Resident, you could apply for a mortgage, but, the eligibility criteria may differ.

What are the steps in applying for a mortgage?

Although, it may seem that obtaining mortgage is a daunting task, it can be simplified if you take care of the documentation. But, before you have even thought about mortgage, it is essential that you look for your house or commercial space.

# Step 1: Select your property:

In UAE, you have popular sites like and other similar sites that provide you thousands of listing for properties. You have 2 choices:

  1. Ready Property;
  2. Off Plan property.

From experience, I would recommend that you only look for Ready Property, meaning, when you have taken possession of the house, you can move into the property to live or to rent it out. The mortgage laws for off-plan properties is quite stringent with banks. Also with ready properties, if rented, you can start getting immediate returns through rent and capital appreciation.

# Step 2: Make agreement with the seller of the property:

If you are directly buying from the developer, there will be a sale contract. If you are buying from secondary market, it is highly recommended that you go through a licensed broker / real estate agency for any property transaction. RERA has laid down strict rules for the real estate firms and brokers. While making the contract make sure you pay attention to your rights. For sure the seller will expect down payment for the property. Run your contract through a Lawyer.

# Step 3: Documentation for mortgage

At this point, if you are planning to apply for Mortgage, you must start gathering your documentation that is required. Typically, following documents are required:

If you are salaried, following documents are required:

  • Valid passport copy;
  • Valid Visa (for expatriates);
  • Valid Emirates ID;
  • Latest salary certificate;
  • Latest 6 month bank statements showing salary credits (justification if no salary credits);
  • Disclosure of all monthly liabilities like Car Loan, Personal Loan, Credit Card limits etc;
  • Payslips may be required if there are variance in salaries;
  • Fees related to processing of mortgage;
  • Proof of down payment (in case of final approval).

If you are self employed, following documents are required:

  • Valid passport copy;
  • Valid Visa (for expatriates);
  • Valid Emirates ID;
  • Valid trade License copy;
  • Memorandum of Association (MOA) and incorporation documents;
  • Latest 2 year audited financials;
  • Disclosure of all monthly liabilities like Car Loan, Personal Loan, Credit Card limits etc;
  • Fees related to processing of mortgage;
  • Proof of down payment (in case of final approval).

In addition to this, property related documents like Title deed, agreement with the seller also may be required. Financial institutions can also request other documents they deem necessary.

# Step 4: Obtain a pre-approval of finance:

Most banks and finance companies do offer pre-approval of some sort to provide you with a rough estimate on your eligibility against your income and current liabilities. This is essential for you to gauge your eligibility. Banks usually charge a fee to arrange this. But, I feel this is sound investment.

How do banks decide your eligibility?

Like in personal loan, banks follow DBR (Debt to Burden Ratio) to decide your eligibility.

For example: If your salary is 30000 Dirhams, your maximum monthly repayment can be 10000 Dirhams, which is 50% of your monthly income. If you have other loans and liabilities, your eligibility will come down.

For expats, suppose the property price is AED 1 million, then the minimum down payment amount has to be AED 250,000.  Let’s say, you have made down payment through your savings and are in need of a home loan of AED 750,000. The monthly installment for AED 750,000 over 20 years comes to around AED 5000. If you do not have any other liability, your DBR will be at 17%. It is easy to calculate DBR.

# Step 5: Finalise your offer:

Once you have finalised the property, you could now submit property details to the bank and let them apply the property to your pre-approval. Banks will do their due diligence and provide you with an Offer Letter which will provide the terms and conditions of the mortgage. Please read the terms and conditions carefully. If you are not able to understand, get help from the bank or a lawyer. There will of course be valuation of the property by a bank appointed valuer.

# Step 6: Transfer of property:

Once your mortgage / home loan is approved, the developer of the property will issue you a NOC (No Objection Certificate – there could be a cost attached to this!), to transfer the property from the seller to the buyer at the Land Departments in the respective emirate. Land Department will then issue you a Title Deed. This should list you as the owner of the property and bank as a mortgage provider. As opposed to the conventional banking, under Islamic Finance, lender will be the owner of the property (lessor) and you will be the lessee. At this point your mortgage is effective and your monthly instalments will start. Bank or the finance company will release the amounts due to the seller (mortgage amount usually) to the seller of the property.

What are the interest rates / profit rates offered for mortgage in UAE?

Being a secured loan, home loans are charged lower than other unsecured loans. Typically the interest rates / profit rates are between 3% and 7%. But you must negotiate as much as possible on your rates with the banks and get discount wherever possible. When you calculate total savings over a period of 20 years, the savings are sizeable.

How long does the mortgage approval process take?

Lenders these days are quite quick in assessing. However, for salaried individuals the process may take up to one week (7 days) and for self employed, it may take longer to get mortgage approval.

How to protect the asset?

Lenders will need you to take a life insurance against the mortgage amount and assign this to them. Usually, lenders themselves will arrange this from their panel of insurance providers. This will protect your asset from your untimely death and will be adjusted towards your mortgage. Insurance premium is collected along with the monthly installments.

Should I take pre-approval from bank?

It is always advisable that you take a pre-approval for your mortgage. This is safeguard and guarantee that you are eligible for a mortgage. Think, if you have made a down payment and then your mortgage application gets rejected!!

What about Islamic Home Finance? What’s the deal?

Islamic Home Finance is the Shariah compliant way to banking. Most Muslims prefer this. In accordance with the Shariah, Islamic Home Finance providers do not charge interest. The structure of the finance is also different. It is not a lender borrower relationship, but, Lessor and Lessee relationship. Effectively, you as a borrower are the lessee and the finance company as a lessor charges you monthly Rent (installment). The finance company is the owner of the property till the time your mortgage is completely paid off.

Will banks / finance companies finance all properties?

No, banks and finance companies have a list of approved property developers with whom they have a legal contract. They will finance properties only from these selected developers / builders.

Registering your property at Dubai Land Department (Complete process):

In Dubai, your property will be registered at Dubai Land Department (DLD). Registration of your interest on the title of a property provides conclusive evidence of your ownership in the property. Article 22 of the new Law provides that the Land Department shall issue a title deed of real property rights in accordance with the current records in the Real Property Registers. Article 24 goes further to say that the title deed referred to under Article 22 shall have absolute power of evidence to establish real property rights.

  • Article 6 of the New Law states that the Land Department shall solely, to the exclusion of others, be authorised to register the real property rights and the long term leases as provided under Article 4.
  • Once a property is completed and handed over to the purchaser (you), the purchaser can then advise the developer to register the title of the property in the name of the purchaser in the Real Property Register at the Land Department.
  • The Sale and Purchase Agreement as well as the accompanying scheme documentation will possibly need to be translated into Arabic (which should be undertaken by the developer).
  • The purchaser will then be asked to sign the Land Department standard transfer form, for the internal use of the Land Department.
  • This form will provide the details of the parties, the property, the purchase price etc.

Land Department Fees:

Both the seller and buyer of the property is charged 2% each by the land department. However, as a practice, developers and sellers transfer these charges to the buyer of the property.

Is it good to compare mortgage offered from different banks?

It is always a good idea to compare mortgages. There are few specialised mortgage comparison sites in UAE, which you can use. But I like the way the following works: Mortgage Finder. 

How to save money on Mortgage?

Shop around with mortgage comparison sites. This is the best way to find information and save money. Typically the main area you should try and save money is on the interest rates as these have a very long term effect. Even a 0.5% discount in interest rate will have a profound effect on your savings.

What are the real costs of Mortgage?

You may get excited that you are buying a new home. However, please note that there are costs associated with the mortgage that you will need to take note of and keep a provision. Let’s hypothetically think, you are interested in a property with a value of AED 1 million.

Following are typical costs and funds you will require to keep ready:

mortgage expenses

  • Down payment: AED 250,000
  • Land Department Fees: AED 40,540
  • Registration fees: AED 4,000
  • Mortgage registration fees: AED 1,885
  • Real estate agency fees: AED 20,000
  • Property valuation fees: AED 3,000
  • Bank processing fees: AED 7,500
  • Total: AED 326,925

So you see, the costs are quite high. Of course, if you are able to afford, you could take a mortgage.

UAE Mortgage Calculator:

If you would like to have calculate you monthly installment and other details, there is a mortgage calculator.

Are there any hidden costs associated with Home Loans / Mortgage?

Buying a home is one of the primary goals most of us have. It is an emotional decision at the same time a financial one. Owning a home in Dubai is matter of pride. There are many things attached to making a home buying decision. Some buy it as investment purpose, some for creating asset etc. You have to be careful when selecting a bank, securing good interest rate etc. Most of us do not think of added expense when considering a home loan. There are many expenses that you will need to be aware of before making a purchase decision. Here they are:

#Processing Fees, Documentation fees, Application fees etc:

This is the fee that the lender charges on you for the amount that you have borrowed. Typically this fee can range between 0.5% to 1% or in some instance more than that. You must make sure that you know what exactly is the processing fees and consider this as part of your expense. Some lenders may also add this to your loan amount if you request them, but this is not a common practice. Certain lenders also charge Pre-approval fees, Documentation fees, Application fees etc

#Valuation Fees:

If you are buying property from secondary market, the lender will need to carry out a technical valuation. There are many companies that carry out this. Banks take help from these valuers to consider a current market price for these properties. Usually these companies charge AED 2000, but banks do add their margin and charge AED 3,000 to the borrower. You must make efforts to get the margin waived.

#Cheque bounce charges:

If in case, during your mortgage duration, there is a cheque bounce or you missed a Standing Order installment, lender will charge you additional fee.

#Loan pre-payment charges:

When you pre-pay your loan, the bank loses out on the opportunity to earn your interest payments. Hence, to indirectly recover the cost, the bank may charge you a penalty on pre-closure of you loan.

#Loan transfer charges:

If during the tenure of your loan you wish to transfer the loan to a new lender, there may be additional charges. Also note that, Land Department will charge separate fees to change the name of the mortgage provider.

Buying a home in Dubai is a dream for many of us. However, we will need to take into account all the facets of the mortgage buying process. Only get into mortgage or buying a property when you are sure about your financial situation and job security. With proper plan and information, you can make your dream come true. Take advice from professionals. Set aside emergency funds.

I hope this article has helped you in some way. If you have any queries, please comment below and I will be happy to assist.

(This article will be updated regularly).