Property Handover Checklist: Things to Look for Before Taking Possession of Your Property

Buying real estate in Dubai is a financially lucrative prospect. To buy property in Dubai, most people have to go through the process of getting a property mortgage. In this article, we will offer you a guide that will help you make an informed decision about securing a property mortgage in Dubai, whether you are a resident buying real estate in Dubai or a non-resident investor.

Demystifying The Property Mortgage In Dubai 

Simply put, if you get a home loan in Dubai, it’ll allow you to finance a portion of the property's purchase price with a loan from a bank or financial institution. Then you will repay the loan along with the interest over a predetermined period which typically ranges from 5 to 25 years.

Factors That Influence Your Eligibility 

Many factors influence your eligibility for a property mortgage in Dubai. These include: 

Nationality 

If you are a UAE national you will generally enjoy a slightly higher loan-to-value ratio compared to those who are expatriates. For example, if a property is worth under 5 million AED, citizens can borrow 85% and above of this value while expats can borrow up to 80% maximum.

Your Income 

Your income also plays a very crucial role. The bank will assess whether you can comfortably pay your monthly mortgage payments. This is called the debt-to-income ratio (DTI). The UAE Central Bank will usually cap the DTI ratio at 50%. 

Down Payment 

In Dubai, it is also mandatory to pay a down payment on the property value.  This down payment can reach from 15% for UAE citizens to 20% for those who are expatriates,

Essential Costs

You must also be prepared for additional expenses associated with a property mortgage in Dubai, these additional costs may include:

Registration fees: There are government fees that are applicable for registering the mortgage with the Dubai Land Department.

Property valuation fee: The bank requires an official valuation to determine the loan amount and you have to pay a fee for this evaluation. 

Mortgage processing fee: Banks will also charge a fee for the administrative cost of processing your mortgage application.

Mortgage insurance: Some lenders will require you to take out mortgage protection insurance. 

Navigating the Mortgage Application Process 

In Dubai, when you apply for a mortgage you will usually go through these steps.

Pre-approval 

You will get a pre-approval certificate from the bank to understand your borrowing capacity 

Property selection 

You will choose your desired property and also obtain a sales agreement 

Documents submission

You will compile the required documents including passport, residency visa, salary certificate, and bank statement, and submit this to the bank 

Bank approval

The bank will then assess the application along with your property valuation before it can issue you a formal approval 

Loan Disbursement 

Once your loan is approved, the bank will disburse the loan amount to the seller as soon as property registration is complete. 

Mortgage Options for Non-Resident Investors. 

Dubai welcomes foreign property investments. However, for foreigners who want to invest in real estate in Dubai, there are slight variations in the process, depending on the price of the property the non-resident will have to pay anywhere from 20 to 40% as a down payment. 

Conclusion: 

Whether you want to buy an apartment in Dubai or a villa, understanding this basic knowledge about mortgages will help you take advantage of all the lucrative opportunities in the real estate market in Dubai. However, we will advise you to seek professional advice from a mortgage broker, this can be immensely helpful in navigating the process and securing the most suitable mortgage option for your needs.