A few years ago, many expats and foreigners hesitated about buying property in the Middle East. Now, Middle Eastern destinations, particularly Dubai, have become ideal choices when it comes to buying properties. Many expatriates prefer Dubai to buy a property to live abroad. The most popular areas for investments are Dubai Marina, Palm Jumeirah, Jumeirah Lakes Towers (JLT), Downtown Dubai, Business Bay, and new developments like Emaar Beachfront.

The Dubai property market’s growth is evident from the fact that house prices here soared 21 percent in late 2021 and foreign demand is set to boost this even further this year, according to a Reuters poll of property analysts. For many expats or foreign investors, this could be a prime time to purchase real estate in the country as a passive income stream.

However, like any other real estate investment, one of the most pressing questions you will need to answer is: How do I finance my property purchase? This is where the option to get home loan mortgage in Dubai comes into the picture. But, before you proceed further, here are 3 basic things about financing a property you need to know.

Your Residence and Homeownership Status Will Determine Your Borrowing Limit

When considering how to finance a home as an expat, one of the things you will have a look at is your borrowing limit. This will determine the amount you will need to come up with as your down payment.

As an expat, your maximum borrowing limit is 80 percent while UAE nationals can borrow up to 85 percent of the property’s value. However, this is also dependent on several factors including your income, credit score and the value of the property you wish to finance.

For instance, properties with a market value of AED 5 million and over tend to have a maximum LTV value of 75 percent for Dubai nationals and 70 percent for expats.

Get Familiar On the Types of Mortgages Available

Expats can readily access different types of home loan mortgages in Dubai to help them finance their property goals. Before making a property financing decision, it is recommended that you spend some time exploring the kinds of financing available to you. You can either apply for a fixed-rate or variable rate mortgage in the UAE. Most variable-rate mortgage offers extend for 5 years while fixed mortgages often have a 25-year term.

types of home loan mortgage

Each option will also have different interest rates. Recently, mortgage rates have hovered around 3 percent but are set to rise in the coming year. For this reason, many buyers may be tempted to take a fixed-rate mortgage thanks to its certainty. Also, if you already own a property and are looking to finance another property as a second home or for investment purposes, you may be able to get a preferential mortgage deal.

According to Micheal Hunter, co-founder of Holo, “This number has now slowed down with mainly new buyers coming into the market. If you currently have a mortgage and are looking to take out a mortgage on a second property or are considering a home-refinance, your loan-to-value will be 65 percent for Emiratis and 60 percent for expats.”

Ensure You Factor in The Additional Home Purchasing Costs

Another thing to think about (and one that many homebuyers often forget about) is the additional costs that come with buying a home in Dubai. Most foreign buyers often opt to purchase freehold properties from developers, which require a 10 percent deposit. However, there are also transfer and closing fees to account for. For instance, those purchasing property in Abu Dhabi or Dubai is required to pay a 2 percent transfer fee to the Dubai Land Department. This is in addition to a 2 percent fee to your real estate agent. This will also be influenced by the motive for buying a property in Dubai.

Finally, don’t feel rushed during the property buying process. Buying and financing property abroad can be quite complicated and it is always better to spend time understanding your options before making the leap. Once you are armed with the right information on your financing options when buying a property in Dubai, you will be off to a good start.

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