If you have decided to buy a property in UAE, you will need enough money for the purchase. Unfortunately, not many homebuyers can be able to buy the property from their personal savings or liquidated assets. The good thing is that a mortgage is available for property buyers who don’t have enough finances for this transaction. However, the mortgage is not for everyone. When looking for a way to finance your purchase, consider the following points.
Types of Mortgages
When looking at this option of financing, it is vital to look into several mortgage providers. Learn about different types of mortgage loans in Dubai and how they are rated. Another important thing is to learn how the interest rates apply. Before agreeing to any mortgage, assess their terms and conditions as you assess their interest rates. Remember, knowing the types of mortgage loans available will help you choose the most suitable for your purchase need.
Check if you can afford the mortgage. It would be heartbreaking to enjoy your new property only to have it repossessed because you can no longer be able to pay. The following aspect will help you determine if you can afford the loan.
- Your monthly income
- The value of the property
- Your employment status
- Your lifestyle
- Credit score, and
At the end of the day, the bank will determine if you can afford the loan. Banks use the debt Burden Ratio to calculate the amount you can borrow. The DBR will represent your monthly debt, including the mortgage payments against your monthly income. That means your monthly income must be at least 3 times higher than the repayments expected every month.
Eligibility is different from affordability. Even if you can afford to pay the loan, you might not be eligible. Here are the criteria used to determine eligibility.
- The maximum amount of loan you can get is 80% of the property value as long as the property is valued at 5 million AED or below.
- You get a 70% loan amount of the property value. This is for properties valued above 5 million AED.
The two points apply to UAE nationals. If you are a foreigner, here are the criteria.
- Property value below 5 million AED gets a 70% loan limit of the property value.
- Any property above 5 million AED gets a 65% loan limit of the property value.
Down- Payment Option
If you want help with the down payment, you must also show you can pay for the upfront costs. The costs are usually between 7 to 8 % of the value of the property. The bank might allow you to add some cash to the down payment to avoid a large debt. This will also allow you to buy a higher-value property. The good thing about some banks is that they give you a 6-month grace period to help you get back on your feet after paying the upfront costs from your savings.
Apart from purchasing your property with your personal savings, getting a mortgage is another excellent option. It gives makes you the sole proprietor as long as you can pay the loan on time. So, know if you are affordable, eligible and if the bank will help you with the downpayment.