For many expats, the common sense is to rent rather than buy when living in a foreign country, where you might not stay indefinitely. Nevertheless, in Dubai many expats find the renting market quite difficult, restrictive and still a bit risky (with the 12 months of rent paid upfront), while buying a home is not that much harder. Foreigners are allowed and welcome to own property in Dubai however can only buy property in certain areas.
The amount is of course greater when buying, but given the attractiveness of Dubai’s property market, buying can not only provide a more pleasant place to live, but also be a smart investment for those who can afford it (and at least you will have something to show for your hard work in Dubai, rather than waste your tax-free income on rent).
Property prices took a hit in the financial crisis, but in the recent years the market has recovered and both prices and rents have been rising again, by double digit percentages per year in many locations (the upcoming Expo 2020 is often being mentioned as a reason, but that is only a small part of the story).
Having decided to buy, the greatest challenge for most people is the mortgage. There are several reasons why being an expat might put you into a more difficult position when trying to get a good mortgage deal:
- You may not be that familiar with the market. You will see lots of advertisements, but this does not mean that the most visible offers are also the ones most beneficial to you.
- You are new to the country without any credit history. This won’t be such a problem if you have a very high paying job with a big and reputable organization. After all, given Dubai’s large expat population, the lenders are used to working with people like you. But if you are a bit lower in the ranks (and income), being a newcomer might limit your access to the best deals.
- You might face additional challenges when it comes to risk management. When you live and work in the UK, take a UK mortgage and buy a UK property, everything is denominated in British pounds and even when you change jobs later, it will stay so. When you are an expat, you need to pay attention to currency fluctuations. Although many expats are paid in AED, it is not uncommon to receive part or all of your compensation in a different currency, especially for those in higher positions working in international companies. Furthermore, you may have other assets and liabilities in other countries (e.g. in the UK), which can further complicate your currency risk exposure.
Most UK, Dubai and global banks have expat sections and some even actively market expat mortgages, therefore they will understand your needs and be able to help. That said, there is still a high probability that you will be offered a less than favourable rate, or be outright rejected. Expats can often get much better deals from lenders who are either less known than the high street banks or who don’t openly advertise expat mortgages, but are willing to make a quote once you approach them. It is best to contact a specialized expat mortgage broker or advisor, who will be able to provide you with access to a high number of these lenders and save you a lot of time.
Note that if you have an existing property in the UK, you might be able to remortgage and release some equity, in order to help finance your new home or living expenses in the first months in Dubai. This is easiest to do while you are still living in the UK and able to prove a UK income. If you have already left your British job and moved overseas, getting a UK mortgage may be more difficult or you may not have access to the best deals. In such situation it is again best to speak with an expat mortgage specialist.