Property Mortgages for Non-Residents & Residents in Dubai

Property mortgages in Dubai provide a popular financing option for both residents and non-residents looking to invest in real estate. The mortgage market in Dubai is well-regulated and offers a range of products to suit different needs. This guide explores the mortgage options available to both residents and non-residents in Dubai, focusing on property types such as off-plan, ready-to-move, freehold, and leasehold properties.

Mortgages for Residents VS Non-Residents

Mortgages for Residents in Dubai

Dubai residents, including UAE nationals and expatriates, have access to a wide array of mortgage products with relatively favorable terms. Local banks are more willing to extend financing to residents, allowing for greater flexibility and higher loan-to-value (LTV) ratios.

1: Eligibility and Documentation

Mortgage Document

Residents can qualify for a mortgage if they have a valid Emirates ID and proof of stable income. Employed individuals must present salary certificates and bank statements, while self-employed individuals are required to provide audited financials. Lenders also perform credit checks to evaluate the borrower’s financial stability.

Key documentation includes:

• Passport and Emirates ID

• Proof of income (salary certificates, audited financials for self-employed individuals)

• Bank statements (3 to 6 months)

  
  

2: Loan-to-Value Ratio (LTV)

For resident first-time buyers, LTV ratios can reach up to 80% for properties under AED 5 million (~USD 1.36 million) and 70% for properties over AED 5 million. For second properties or investment properties, the LTV drops to 65%. UAE nationals enjoy slightly higher LTV ratios, offering them even more leverage in property investment.

3: Interest Rates 

Residents benefit from competitive interest rates ranging from 2.5% to 4.5%, depending on whether the mortgage is fixed-rate or variable-rate. Fixed-rate mortgages offer stability for a specific period, while variable-rate mortgages fluctuate with market conditions.

4: Mortgage Tenure

Mortgage repayment terms in Dubai can extend up to 25 years, making it easier for residents to spread out their payments and manage their financial commitments. However, the mortgage must generally be paid off when the borrower reaches 65 years old for salaried individuals or 70 years old for self-employed individuals.

5: Residency Visa Through Property Investment

Residents who invest in property worth more than AED 2 million  {~ USD 544,000} can apply for a Golden Visa or a 3-year renewable residency visa, adding an additional incentive to invest in Dubai’s real estate market.

Mortgages for Non-Residents in Dubai

Non-residents can also take advantage of Dubai’s real estate market, although the mortgage terms for foreign buyers tend to be more restrictive. Non-residents usually need to provide more documentation and face stricter eligibility criteria.

1: Eligibility and Documentation

Non-residents need to show proof of income from their home country or abroad. Lenders usually require international bank statements and salary slips. While the documentation process is more rigorous, large international banks in Dubai, like HSBC and Standard Chartered, cater to non-residents.

Required documents include:

• Passport (copy) and proof of residency in the home country

• Proof of income (salary slips, bank statements)

• International bank statements (usually 6-12 months)

• Credit reports from the home country (if requested)

2: Loan-to-Value Ratio (LTV)

For non-residents, LTV ratios are typically lower, with banks offering 50-60% of the property’s value. As a result, non-residents are required to make a higher down payment, often around 40-50%, to secure a mortgage. This mitigates the risk for lenders, as non-residents don’t reside in the UAE and therefore present a higher risk profile.

3: Interest Rates

Interest rates for non-resident mortgages tend to be slightly higher than those for residents, typically ranging between 3.5% and 5%, depending on the bank and the borrower’s profile. These rates are still competitive, especially when compared to other global real estate markets.

4: Mortgage tenures

Mortgage Repayment terms  for non-residents are also shorter, typically ranging from 15 to 20 years, with some lenders offering up to 25 years. Like resident mortgages, the borrower is required to repay the loan by the age of 65 for salaried individuals and 70 for self-employed applicants

Key Considerations for Both Residents and Non-Residents

1. Mortgage Caps: The UAE Central Bank has implemented mortgage caps to ensure a stable market. For instance, residents buying a second home are subject to lower LTV ratios (usually 60%), and the same applies to non-residents buying investment properties. It’s essential to factor these caps into your financing plan when considering multiple properties.

2. Currency Exchange Risk: For non-residents, it is important to consider the currency exchange risk involved in financing property in Dubai. Mortgage repayments will be in UAE dirhams (AED), and fluctuations in currency exchange rates could impact the overall cost of the loan, especially for investors from countries with volatile currencies.

3. Fees and Additional Costs: Investors must be aware of additional costs associated with buying property in Dubai, such as the Dubai Land Department (DLD) fee, which is 4% of the property value. Banks may also charge processing fees (typically 1-1.5% of the loan amount) and valuation fees, which need to be factored into the total investment cost.

Charges for Mortgages

Whether you’re a resident or non-resident, there are several fees to consider when taking out a mortgage in Dubai:

• Mortgage registration fee: 0.25% of the loan amount, payable to the Dubai Land Department.

• Processing fees: Typically around 0.25-1% of the loan amount.

• Property valuation fees: Between AED 2,500 to AED 3,500.

• Early settlement fees: Usually 1-3% of the outstanding loan balance if the loan is paid off before the full term.

Mortgages for Different Property Types in Dubai

Off-Plan vs. Secondary Properties

1- Off-Plan Property Mortgages

Off-plan properties—those still under construction—are popular among investors looking for lower entry prices. However, financing off-plan properties can be more restrictive due to the increased risk involved.

• LTV Ratios for off-plan properties are generally lower, around 50-60%. Buyers must pay 40-50% upfront.

• Mortgages are disbursed in stages based on construction milestones, which means the loan is released progressively.

• Banks are more inclined to finance off-plan purchases from reputable developers like Emaar and Nakheel.

• Interest rates may be slightly higher for off-plan properties due to the risks associated with construction delays or project cancellations.

2- Ready-to-Move Property Mortgages

Ready-to-move properties are completed and available for immediate occupation, making them the most straightforward option for mortgage financing.

• LTV Ratios for ready properties are higher for residents (up to 80% for first-time buyers) and more favorable than off-plan properties.

• The mortgage approval process is quicker, as there are no construction risks, making it an ideal option for personal use or immediate rental income.

• Interest rates are generally lower for completed properties, and the buyer can choose between fixed and variable-rate mortgages.

3- Freehold Property Mortgages

Freehold properties allow full ownership of the property and the land on which it stands. Both residents and non-residents can obtain mortgages for freehold properties in Dubai’s designated freehold zones, such as Dubai Marina, Downtown Dubai, and Palm Jumeirah.

• High LTV Ratios: For expats, up to 80% of the property value is available for freehold properties, offering significant leverage.

• Lower Interest Rates: Freehold properties generally come with lower interest rates due to the full ownership rights and stability they offer.

• Flexibility: Owners of freehold properties can sell, rent, or modify their properties without the limitations typically associated with leasehold properties.

4- Leasehold Property Mortgages

Leasehold properties allow ownership for a fixed period, usually between 10 to 99 years. After the lease term expires, ownership reverts to the freeholder. Mortgages for leasehold properties are available, but they come with unique considerations:

• Lower LTV Ratios: Banks offer 50-60% financing for leasehold properties, with stricter terms if the lease period is short.

• Valuation: The remaining lease term significantly impacts the bank’s valuation and the amount a buyer can borrow.

• Less Flexibility: Leaseholders may face restrictions in terms of property modifications and may be responsible for ground rents and service charges, adding to the total cost.

Conclusion:

Dubai’s mortgage market provides a broad spectrum of financing options for both residents and non-residents. Residents enjoy higher loan-to-value (LTV) ratios, lower down payments, and extended loan terms, while non-residents can still access competitive mortgage products. Whether you are purchasing an off-plan, ready-to-move, freehold, or leasehold property, Dubai’s mortgage market offers opportunities for both personal and investment purposes.

Moreover, If you're considering entering the Dubai property market, it's vital to explore all available mortgage products that align with your financial strategy. The right mortgage can pave the way for personal ownership and profitable real estate investments in this market.