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Beginner’s Guide to Getting a UAE Mortgage

Holborn Assets often hears complaints from UK expats that the UAE mortgage process is tricky to get to grips with. Getting a mortgage in the UAE is similar to getting a mortgage in the UK. But not quite the same.  And the devil is in the detail:
  • How does the UAE mortgage process differ from the UK?
  • What do I need to be eligible for a UAE mortgage?
  • What fees can I expect to pay?
  • What finances do I need up-front?

How does the UAE Mortgage Process differ from the UK?

One thing you will clock immediately is that no solicitors are involved. So, on the upside, no solicitor’s fees. On the downside, you have no one to check what you are signing or what the process is. Your Real Estate agent largely handles the paperwork.  And what might take you a little longer to suss out is that Real Estate agents (as estate agents are called in the UAE) operate for both the buyer and the seller (with the buyer paying the Real Estate agent’s fees). So independent advice is thin on the ground. Apart from the impartial helping hand offered by mortgage brokers. The good news is that you get more bang for your buck from UAE brokers. In the UK, mortgage brokers bag a hefty cut of the purchase price. But, in the UAE, brokers charge only a nominal cut – plus some fixed fees. Whether you go it alone or get some help, make sure you nail down a mortgage before you go house-hunting. Armed with pre-approval this gives you a stronger negotiating position. And some deals will be out of your grasp without it.

What do I Need to be Eligible for a UAE Mortgage?

Just like in the UK, the bank will look at your Debt-To-Burden ratio. This is the sum total of your monthly liabilities (including general living expenses) compared to your salary. In other words – money going out vs. money coming in. To be eligible for a UAE mortgage, Central Bank demands that your salary should be at least double the total of your monthly liabilities. Unlike in the UK, 5% of the limit on each of your credit cards is included in this calculation of your liabilities – regardless of how much you owe on cards or how much you use them. So don’t let those limits creep up! All lenders demand a minimum monthly income. Levels vary, so shop around. You will also be judged on the size of your family and your ability to prove that you intend to stay in the UAE for a while. For preferential rates, think about transferring your current account to the bank offering you a mortgage. But bear in mind you will have first have to pay off any personal loans with your existing bank and check with your employer this can be done.

What Finances do I Need Up-front?

  • For expats buying a property to live in, a total 25% deposit on purchase prices less than AED 5 million; 35% deposit on a purchase price of AED 5 million; 40% deposit for investment properties or second property.
  • Bear in mind that a deposit of 10% of the purchase price is given to the Real Estate Agent when signing the MOU. This is a security cheque to commit you to the purchase – usually held and not cashed.
  • Fees totalling 7.5%-8% of the purchase price.

How do the fees break down?

On top of the deposit, you need to factor in paying roughly 7.5%-8% on the purchase price of your new property. Expect three types of fee:
  • 4% on the purchase price + AED 580 admin fee (Land Department Transfer Fee) – the equivalent of UK Stamp Duty
  • 2% on the purchase price (Real Estate Agent Fee) – the equivalent of UK estate agent’s fees
  • 1% on the loan amount (Bank processing Fee)
  • 0.25% + AED 290 admin fee on the loan amount (Land Department Mortgage Registration Fee)
  • Valuation fee of between AED 2500 and AED 3000
  • AED 4,000 Land Department Transfer Centre fee
Don’t forget about service and maintenance fees on the property once you’ve bagged it. And, if you are transferring a mortgage, extra fees apply.

Holborn Assets Mortgage Services provides a full mortgage advisory service using UK qualified mortgage specialists tailored to your requirements.  

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Now you’re familiar with the rules and regs of the UAE mortgage process, learn how to tip the balance in your favour in our companion article “Ten Ways to Ace your UAE Mortgage.” Coming shortly.

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