With a 69% increase in transactions over AED 10m in 2022, Dubai’s luxury property market is booming. If you’re looking to buy a luxury property, whether it’s to live in or as an investment, you may need a mortgage to help finance your purchase.
Whilst securing a mortgage for a luxury property can seem daunting, there are steps you can take to make the process smoother and increase your chances of getting approved. Here are 8 tips to help you secure a mortgage for your luxury home in Dubai.
Having a substantial deposit in cash is a vital first step to securing a luxury property mortgage in Dubai. Regulations from the Central Bank of the UAE require ex-pats and non-residents to have a deposit of at least 20% of the purchase price (15% for UAE nationals) when buying a property under AED 5 million.
In the case of luxury properties with a price of over AED 5 million, the deposit requirement increases to 30% for ex-pats and non-residents, or 25% for UAE nationals. Also, if the purchase is for a second or subsequent property, rather than your only property, the deposit requirements increase to 35%.
To get a luxury property mortgage in Dubai, the bank will need to see a variety of documents from you, so make sure you have these to hand. The most commonly required documents include a copy of your passport, visa, Emirates ID, proof of salary (if employed), trade license (if self-employed) and bank statements. The bank may require other supporting documents to verify your employment, income sources and liabilities.
Banks will look at your credit score to assess your creditworthiness and how likely you are to repay your mortgage on time. If you have a track record of repaying your debts on time, you should have a good credit score, whereas a history of missed payments, mortgage defaults, and bankruptcy can be big red flags that stop you from getting a mortgage.
In the UAE, the Al Etihad Credit Bureau (AECB) is responsible for issuing credit reports. It’s a good idea to check your credit score from the AECB website first. If your credit score is poor, you should then take steps to improve it before applying for a mortgage.
Lenders will look at your income, expenses, and debts to determine how much you can borrow. They will typically look at your income minus any debt repayments and expenses to understand what monthly mortgage repayment you can comfortably afford.
Therefore, if you want to increase the amount that you can borrow, you should consider increasing your income, paying any outstanding debts and reducing your expenses.
The length of mortgages varies, with the UAE permitting a maximum mortgage length of 25 years. A longer mortgage will reduce the monthly payment, but it will increase the amount of interest that you pay over the length of your mortgage. It's important to consider the mortgage length that is most suitable for you when purchasing a luxury property.
If you are comfortable with a higher monthly payment, then taking a shorter mortgage could be a good idea as this will allow you to pay less interest in total and pay off your mortgage sooner. Or, if you prefer the flexibility of a smaller monthly payment, a longer-term mortgage could be your most suitable option.
A deposit is not the only upfront expense that you are likely to incur when buying a luxury property in Dubai. There are also a number of fees to consider, including legal, registration, agency and valuation fees. Make sure you factor these costs into your budget when calculating how much you can afford to borrow.
If you are looking to get a mortgage for a luxury property in Dubai, we would strongly recommend speaking to an experienced mortgage broker. A mortgage broker can offer you specialised market and financing knowledge, access to exclusive rates, and step-by-step support which covers the buying process, fees, timescales and borrowing limits.
Mortgage pre-approval is where you’ve been approved by a lender for a mortgage up to a certain amount. It is a very good idea to get pre-approval prior to starting your property search. This will give you a clear idea of how much you can afford to borrow, and your budget for finding a property. Having pre-approval in place also shows sellers that you are serious and can afford to purchase the property, making them more likely to accept an offer from you.
Securing a mortgage for a luxury property in Dubai requires careful planning and preparation, and it’s strongly recommended that you have an experienced mortgage advisor by your side.
Contact us now to schedule a meeting with a mortgage advisor
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