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Five Questions To Ask Your Mortgage Broker

Holo Blog

If you're thinking about buying a new home, especially for the first time, you might be overwhelmed and confused by the process of getting a mortgage. You may well want to consult a mortgage broker in Dubai. But you don't need to do that. Our mortgage experts know Dubai mortgages like the backs of their hands. With over 25 years of experience in the UAE market, they've compiled the 5 most frequently asked questions they get asked by Holo customers about buying a home.

1) How much can I borrow?

The amount you can borrow entirely depends on your liabilities and income.

If the property's value is under AED 5 million, you borrow up to 80% as an expat and 85% if you're a UAE national. If the value is above AED 5 million, the percentage decreases to 70% for expats and 75% for UAE nationals.

Top tip: Using a Mortgage calculator in Dubai will help you understand how much you could borrow. We have got one you can use. It takes less than two minutes, give it a go!

2) Can I borrow my deposit?

No, the Central Bank regulations don't allow you to take personal loans to finance the down payment.

Remember, if you are an expat and the property value is under AED 5 million, youbll need to save a 20% deposit. If you're a UAE national, youbll need a 15% deposit. If the property value is over AED 5 million and you're an expat, youbll need a 30% deposit or 25% if you're a UAE national.

The good news is that some banks will allow you to add the associated fees to your Dubai Mortgage. So while you can't borrow your deposit, you can get help with the extra costs.

3) What extra fees are involved?

A mortgage broker in Dubai will typically charge you a fee. But at Holo we don't charge you any fees to use our service; it's free! There are, however, fees associated with buying a property in Dubai. Let's break them down for you.

  • Valuation Fee AED 2,500 - 3,000 + VAT: A fee paid by the buyer to assess the current market value of the property they wish to buy
  • Bank Processing Fee 0-1% + VAT of loan amount: This is a fee charged by the bank for processing your mortgage and is normally charged before your Final Offer Letter is issued
  • Land Department Fee 4% of property value + AED 580: This is a one-time fee paid to the DLD (Dubai Land Department) for registering the Real Estate transaction
  • Trustee Fee AED 4,000 + VAT: Fee charged by the trustee office for facilitating the property transaction on behalf of the DLD
  • Mortgage Registration 0.25% of loan amount + 250 AED: This is a fee charged for the registration of a mortgage against a property. This is charged on the day of the transfer
  • Real Estate Fee 2% of property value + VAT: This is a fee charged by your Real Estate Agent for their services

These fees can add up. When you use a mortgage calculator in Dubai you can choose to factor a percentage of these fees into your mortgage amount lowering the upfront cost. However, you may pay more interest if you do this.

4) What's the best rate?

Mortgage rates change monthly. If you want to know the latest rates and best products for you, try the Holo Mortgage Calculator. It will help you decide how much you'll need to borrow in less than two minutes and give you a selection of products that meet your needs. Holo has access to over 500 mortgage products so we will get you the best deal and best rate on the Dubai mortgage that is right for you.

5) What's the difference between a fixed and variable rate mortgage in Dubai?

A fixed rate means that the rate of interest on the mortgage you pay typically stays the same for a specific period of time, normally between 1-5 years. During this period of time your mortgage rate, therefore payment, will not change.

The benefit of a fixed rate mortgage is that you can effectively budget for your living expenses for a set period of time. After your fixed rate period ends, you will automatically move to the bank's variable rate or you can explore a buy-out or remortgage option to see what other options may be best for your financial needs.

A variable rate mortgage means the interest you pay can vary from time to time. Variable rate mortgages are linked to something called the EIBOR. The EIBOR is a benchmark interest rate for lending between banks in the UAE with a percentage fixed by the bank. The majority of banks will adjust the variable rate every 3 months. You may find that some banks offer variable rate mortgages on a monthly or 6 month basis but this is less common.

The benefit of a variable rate mortgage is that while interest rates are low you will be able to benefit from the low EIBOR rate, unlike a fixed rate where the amount of interest you pay does not change.

Got a question we haven't answered here? The Holo team is always here to answer your questions and to help you get your Dubai mortgage sorted.

This blog is for educational purposes, but everyone's case is unique, and local guidelines and regulations may change. Our mortgage advisors can help you with any question you may have and have the latest advice. Get in touch.

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