Most expatriates in Dubai live in rented accommodation. This is perfectly normal, if you plan to work in the emirate for a couple of years and then leave. Still, those who plan to stay for longer should definitely consider buying a property. The investment can keep paying off even after you leave. In addition, given the slump in the Dubai real estate market from a year back, you can readily find an affordably priced property. Getting a home mortgage will also not be a problem, as long as you know what to expect as a borrower.
Most large local and international banks offer home mortgage loans to both UAE citizens and expatriates that receive their income in Dubai through an employment contract. There are also a couple of popular home finance companies that hold large shares in the mortgage market. When choosing a lender to work with, you should look at the service terms and conditions they offer as well as at their reputation.
Lenders, such as the Abu Dhabi Commercial Bank, HSBC and the Tamweel home finance company are quite reputed and have very few customer complaints. On the other hand, some banks and companies offering mortgage loans have been widely criticized for imposing unexpected fees on their clients. Hence, it is worth researching the lender in more detail, just to be on the safe side.
The home mortgage interest rates in Dubai are present are quite acceptable. You can get a loan at an APR of as low as 6%, but usually you will need to repay 7% to 8% of the sum annually. These are just approximate figures. The actual interest rate is determined on a number of different factors. For complete information, you should check each loan package specifically. Keep in mind that you have to consider the fees you need to pay as well as the interest to get an idea of the entire cost of the loan.
Expatriates can expect to receive financing for their home of around 60% of its actual value. This is not a large percentage, so you should have the rest of the sum ready. Still, you might get financing of up to 90% of the value of the property, if it is being developed. Such home mortgages are usually available for selected development projects only. The mortgage term was traditionally only 15 years for expats. However, at present you can also find 25-year home loans for expatriated working in Dubai.
In order to get a home mortgage loan from a bank or home finance company in Dubai, you need only a basic set of documents. These include payment documentation from your employer and bank income statements for anywhere between three to six months back. You will need your passport as well. Each lender has their own approval policy, but borrowers are expected to conform with a loan to debt ratio limit which is usually 50% to 60%. Simply put, the highest proportion of your income that can go towards the mortgage repayment should be not more than 50 to 60 percent.