Wondering where to start? We tapped the experts…

Dubai’s thriving property market is seeing more and more residents and international investors purchase property in Dubai. If you’re considering becoming a homeowner in the city, you may be looking at getting a mortgage to finance the property. To help you figure out where to start, we tapped the experts for what to know about getting a mortgage in Dubai.

Where to start

“Key things to consider are: how much do you have as a deposit, how much total salary, benefits and other income do you have, lastly is what are the exact liabilities you have going out that need to be deducted,” says Stuart Roe, Partner at Allsopp & Allsopp. “Be advised that rental income can be included for properties in the UAE, however after calculations only 40 per cent of the income is included in your income and 100 per cent of the liability is considered. he adds. “There is actually another point to consider which is how old is the buyer as most banks will allow mortgage buyers to go up to age 65 whereas there are some now that will allow buyers to go to 70 years old. This would allow lower monthly instalments and also enable buyers to borrow more.”

“You need to do the maths to figure out where you stand,” explains Joshua Pargin, Senior Consultant at Nomad Homes. “Can you afford the repayments? Do you have the down payment and fees required to complete the purchase? What current liabilities do you have and is there a way to reduce them?,” he says are three key things to consider. “As a general rule, your living expenses mortgage and bills should be around 33 per cent of your monthly income.”

Who to work with

“Everyone has the ability to download a copy of their credit file and then it would be best to get in touch with a mortgage broker and look at the options,” explains Stuart Roe, Partner at Allsopp & Allsopp Group. “A good broker will have access to all the products on the market and will be able to evaluate exactly what the buyers can afford.”

“Mortgage brokers have the access and the knowledge of the whole of the mortgage market and can guide you to the best options based on your circumstances,” agrees Mollie Credland, Mortgage Advisor at Espace Mortgage Services, part of Espace Real Estate. “Using a mortgage broker can save you a lot of time and money instead of approaching each individual bank yourself. They will guide you through the process, take care of any admin involved and liaise with the bankers on your behalf, all ensuring a seamless home-buying process.”

How to avoid mistakes

One common mistake people make is going direct to their bank, rather than shopping around the market,” says Joshua Pargin, of Nomad Homes. “It’s always best to go to a broker who will advise you on the best products in the market.”

A mistake we see time and time again is people missing out on their dream home due to not having obtained their mortgage pre-approval,” Mollie Credland, of Espace adds. “As the property market moves so quickly in Dubai, many buyers become disappointed having found the home of their dreams only to lose out to a buyer that is already pre-approved for their mortgage and can fully commit to buying the property. A mortgage pre-approval lasts 30 to 60 days (bank depending), it is free of cost, has no obligation, and can even be extended. I would always advise securing your pre-approval as soon as you start your property search, to avoid disappointment and stress further down the line.”

How to choose a mortgage provider

When deciding the best mortgage provider for your new mortgage, you should consider interest rates, loan terms, fees, and customer reviews of the bank. There are 18 banks in the UAE currently offering mortgage lending,” Mollie Credland an Espace Mortgage Advisor explains. “Many of the banks offer preferential interest rates should you move your salary to them (salary transfer), this can be something to also consider if suitable for your circumstances.”

How much can you borrow?

“Typical borrowing limits and mortgage affordability are calculated the same way across all banks within the UAE,” says Mollie Credland, of Espace. “Your monthly liabilities: car loans, personal loans, new monthly mortgage installments and a percentage of your credit card limits must not exceed 50 per cent of your total monthly income. This is known throughout the region as your Debt to Borrowing Ratio.”

“General rule of thumb is you could borrow seven times your annual salary,” Darren Bell, Senior Mortgage Manager at Holo adds. “However, the banks are only allowed to use 50 per cent of your monthly income towards debt repayments (mortgages, loans & credit cards). While you can’t take a loan to finance your deposit, there are mortgage products available which allows you to add fee assistance to cover the majority of home buying associated costs,” he adds.

How long does the process take?

“On average it takes 7 to 10 working days to obtain pre-approval,” explains Darren Bell of Holo. “The whole process up to transfer or completion can take 6 to 8 weeks.”

Image: Waqas Sultan/ Unsplash