What You Need to Know Before You Get a Mortgage in Dubai
Getting a mortgage in Dubai? Here are a few questions asked by buyers frequently.
In order to buy a property in Dubai, can I take out a personal loan to fund the deposit?
Using a personal loan to subsidise a down payment or deposit is not permitted under current UAE Central Bank Mortgage Regulations. The Al Etihad Credit Bureau was introduced a couple of years ago and was recently enhanced to provide a credit scoring system. The bureau is being used by all banks and lenders to record all mortgage, personal, car and company loans, as well as all credit card facilities and overdrafts. This means consumers cannot source a personal loan from one bank, while simultaneously applying for a mortgage with another lender. If any consumer is being advised to do this, they should not do so, as this practice can result in serious consequences. One or both loan providers could potentially retract the loan offer at the last minute, if and when becoming aware of the other facility. This can result in buyers losing their 10% deposit on the property if they are later unable to meet the funding requirements. Speaking to a mortgage broker in Dubai is advisable.
Do banks offer mortgage for off plan properties? Please explain the process.
Yes, banks do offer mortgages for off plan properties. The maximum loan to value for an off-plan property will be 50% of the SPA value. The lender will pay the 50% only after the buyer has completed the first 50% of the payment. Once the buyer has selected the off-plan property he/she wants to purchase, it would be advisable to check the best mortgage deals in Dubai for off-plan properties and which lenders will finance it. A mortgage broker will be able to provide you with options. After selecting the lender, the first step would be to get preapproval. The property Oqood and mortgage must be registered at the Dubai Land Department. After this the lender, will release the payments directly to the developer as per the payment schedule.
How does a mortgage broker help an applicant save money and time?
A wrong mortgage in Dubai could cost you a lot of money and on top of that the work being involved could be quite stressful. Often banks headline rates which can be misleading. A mortgage broker will help you to select the right product for your exact needs from the various available products in the market. They will also help you to understand the complete product with a break up of all costs associated with it and will be able to guide you through the mortgage process efficiently. The charges are generally based on the loan value and the complexity of the case.
What is the cost involved for securing a mortgage? What are the different charges one has to pay?
To secure a mortgage the charges associated with the bank are normally an application fee of AED 1,000, there is a property valuation charge of AED 2,500 approx. and a bank processing fee up to 1% of the loan value. These charges however may vary from bank to bank and are also based on property type. On top of that there are other charges associated with the property purchase that go towards the Dubai Land Department. In total, all these charges may amount to around 8% of the property value. If you are looking to buy a property of AED 1 million, you will need 25%, i.e., AED 250,000 as down payment and up to 8%, i.e., AED 80,000 as other associated fees.