If someone plans to buy a property or thinking about buying a home in Dubai it can be done either through cash or by taking a mortgage. Mortgage in Dubai makes it easy for a person to finance the property with the best deals available, and spread the payments over several years and pay them on agreed instalments. This will prevent the burden of paying the full amount upfront.
This is the detailed guide about what is mortgage and how does it works in Dubai? Let’s break it in simple terms;
What Is a Mortgage?
A mortgage is a type of loan that helps you buy a property, without you paying the full amount. A larger portion of the amount is provided by a bank or any financial institution. Buyer is required to pay the deposit upfront that is called a down payment and rest of the amount is to be paid to the bank in monthly instalments, over an agreed period usually 15-25 years.
The property that is mortgaged acts as a security for the loan and if the borrower fails make the repayments, the lender has the legal right to recover the amount by selling this property. Mortgages are of different types and your repayment process is determined by your choice of mortgage.
How Does a Mortgage Work in Dubai?
In Dubai, there are certain bodies Regulations like Dubai Land Department (DLD) and UAE central Bank Regulations to make the mortgage process well regulated and structured. This helps both the buyers and the lenders to make deals in a safe environment.
1. Saving the down payment
The down payment is the deposit that is to be paid upfront when you buy a property. The minimum down payment in Dubai is usually lower for the residents and higher for the non-residents. Residents may finance up to 75-80% of the property value (that is lower down payment) and non-residents can get around 50-60% of their property value (that is higher down payment.
The down payment also depends on the property value and the mortgage deal.
Before deciding your budget, you can use a Mortgage Calculator to estimate your monthly instalments and affordability.
2. Getting a Pre-approval
Mortgage pre-approval is done before finalising the property. It is given by a bank after viewing the borrower’s credit history, financial profile, income, employment status etc. pre-approval helps a buyer to decide how much he/she can borrow and it also helps him make the strong negotiation with the seller.
If you are ready to move forward, you can Apply for Home Loan in Dubai and start your mortgage journey smoothly.
3. Property assessment
Property assessment or valuation is done by the banks to determine the property’s fair market value, based on the type of property. Banks provide loans based on the valuation price or the purchase price agreed by the seller and the buyer.
4. Loan Approval
After everything goes well, the final offer letter in issued by the bank that includes the terms like the loan amount, interest rate, loan tenure, installments, etc. Before proceeding, the buyer needs to sign the letter.
5. Final Transfer
After the loan is approved the funds from the banks reach the seller, the mortgage is officially registered with the DLD. The buyer get the title deed issued on his/her name.
Conclusion
Buying property in Dubai is a well regulated and structured process that is designed to protect the local as well as the international buyers. It becomes more easy and stress-free if you consider taking the expert advice. At Neon Mortgage, our team with years of experience, is there to help you with proper planning, financial preparation, and other things to make the process smooth and efficient for you.
