Financing of an existing property

When purchasing an existing property, at least 20 percent or, as a non-resident, 50 percent of the purchase price must be contributed as equity. 80 percent or 50 percent can be financed by a local mortgage.

The maximum term of a mortgage is 25 years. Due to the high rents in Dubai, your rental income is likely to be higher than your monthly instalments, meaning not only will your tenant pay for your mortgage, but in addition you’ll also make a profit every month. On average your investment property in Dubai is already completely paid off after 8-12 years.

Financing solution of the real estate developers

Meanwhile, the established real estate developers offer their own financing solutions. Developers such as Sobha, MAG, Ellington, Damac, Emaar and Nakheel in particular offer extremely attractive payment plans.

These allow the buyer to make interest-free payments within a predefined period of time while your property is being built. Some developers even offer post-handover payment plans, meaning the payment plan will extend to a few years after handover. This way you can already rent out your property, even though it’s not fully paid yet, and the remaining instalments are (partially/fully) covered by the rent you receive. The administrative effort involved in such financing is basically zero and comes by default with your off plan property purchase. It is often cheaper than conventional financing.

When the property is handed over, a maximum of 50% can easily be financed for foreigners with UAE banks (see option 1, financing of an existing property).

It is always a good idea to consider a mortgage for your investment property in Dubai. It is a unique chance to get bank financing for a property abroad / by a foreign country. Anywhere else in the world you will not have many options to finance property as a non-resident / foreigner. Understanding the aspects of a mortgage in Dubai for a non-resident is crucial when considering an investment in real estate here in the UAE.

Here are the key aspects you should be aware of:

1. Eligibility Criteria:

Non-residents can typically secure mortgages in Dubai, but eligibility criteria might be more stringent. Lenders will consider factors such as income stability or bank statements showing an average balance of 25.000 AED or more on your bank accounts for the past 3 months, and the purpose of the property (investment or personal use). 

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2. Loan-to-Value Ratio (LTV):

Non-residents often have a lower LTV ratio compared to residents. This means you need a larger down payment of 50% of the property value.

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3. Interest Rates:

Interest rates can vary among lenders and can be fixed or variable. Non-residents might be offered slightly higher interest rates compared to residents due to perceived higher risk. 

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4. Loan Tenure:

Loan tenures for non-residents are generally 5-25 years, capped at the age of 65. For example, if you’re 55 years old, you can get a bank mortgage for a maximum of 10 years. If you’re 60, you can get up to 5 years, or you can get up to 25 years when you’re 40 years old or younger. The duration will greatly impact your monthly payments, so make sure you're comfortable with the repayment schedule.

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5. Required Documentation:

As a non-resident, you'll need to provide specific documentation, including your passport, income proof (employment contract, salary statements) and/or bank statements, proof of address and possibly tax returns from your home country.

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6. Down Payment and Fees:

Prepare for a larger down payment as mentioned earlier. Additionally, factor in other costs such as property registration fees, valuation fees, insurance fees and mortgage arrangement fees.

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7. Pre-Approval:

Getting pre-approved for a mortgage can help you understand your budget and give you an edge when negotiating with sellers. It’s crucial in order to secure the best deal in an extremely fast market where you don’t have time to go through the mortgage process only after you’ve decided on a property.

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8. Repayment Options:

Understand the repayment options available, including fixed or variable interest, and choose the one that aligns with your financial goals.

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9. Insurance and Protection:

Some lenders might require property insurance as a condition of the mortgage. Additionally, consider life insurance that covers the mortgage in case of unforeseen circumstances.

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10. Exit Strategy:

Plan an exit strategy in case you decide to sell the property or if market conditions change. This could involve factors such as rental income potential, property appreciation, and local economic trends.

Navigating the mortgage landscape as a non-resident can be intricate, but with proper research, guidance, and consultation you can make informed decisions that align with your investment goals in Dubai's real estate market.

We have a network of trusted partners to help you to fulfil your financial goals.

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