If you are considering taking out a mortgage in the UAE, you have probably heard the term "pre-approval."

If you are unsure what a pre-approval is or why you should arrange one, this Holo guide is here to help explain.

In brief, a pre-approval from a UAE bank is a notification from the chosen mortgage lender that states how much they would be in a position to lend. This is not a legally binding offer promising to lend that amount but is based on an initial assessment of your profile and the initial documents you submitted to the lender for an agreement.

Why get a bank pre-approval?

A pre-approval is not mandatory when buying a property, but we always recommend property buyers arrange one before starting to search for a home. It helps buyers: 

• Assist with the property search - From the decision in principle, you will know exactly how much you can borrow toward the loan; this will let you only concentrate on searching for properties within your budget. This prevents you from falling in love with a house only to discover later that you cannot afford it.
• Put yourself in the best possible position to negotiate - When you are pre-approved, real estate agents will most likely treat you as a serious buyer. The approval shows that you are ready to move forward, and is it proof that you can afford to buy the property you are interested in? It puts you ahead of any buyers who are not yet approved and possibly 1-2 weeks ahead in the house-buying process.

How do I get a pre-approval?

You can approach lenders at any time to gain your mortgage preapproval. Banks will typically take 3-5 days to approve a salaried application and up to 7-10 days if you are a business owner in the UAE. You can, however, access the Holo online application system to get instant quotations and apply within minutes. 

In order to obtain your quotation for the online pre-approval, we need to learn a little bit about you:

• Income Breakdown
• Property Requirement
• Loan Type
• Amount you would like to borrow
• The approximate value of the property

If you fill out the few questions on the application and submit your details, you will have an instant quotation and the opportunity to upload your documents to our platform. 

Things to know about a pre-approval 

Here we give you the lowdown on the finer details of getting a pre-approval. 

How long will my pre-approval last for? 

Typically, banks put a time limit of 45-90 days on a pre-approval before it expires. This is due to possible changes in your circumstances. If the approval expires, you will need to resubmit some updated documents to your Holo dashboard. 

Is my credit affected by a pre-approval? 

The good news is that no, it will not affect your credit file. Unlike in some countries, applying for a mortgage does not have an effect on your credit score. Any application will show up on your AECB report, but there is no negative impact. 

Can a bank decline my application? 

The granting of the pre-approval is very much based on your profile and the documentation provided to the lender. Always declare any factors that you think may affect your application so that the lending bank is fully aware from the outset. Issues like bounced cheques or missed credit payments can have an effect on your final approval, so it is better to declare them. 

Will getting a pre-approval guarantee my final mortgage? 

Once you are pre-approved, you will be in a very strong position for your loan; however, nothing is guaranteed until the day you get the keys to your new home. You will still need to evaluate the property after getting a pre-approval, and you must proceed to the final offer letter before the loan can disburse. Your Holo case manager is on hand throughout the process to assist, so we don't tend to expect any problems once the valuation comes back and there are no issues.

What other names is a pre-approval known by? 

Different lenders in the UAE will refer to a pre-approval by different names, yet they all mean the same thing. So, if you hear terms such as

• AIP: Approval in Principle
• IPA: In-Principle Approval
• DIP: Decision in Principle

Don't worry, they are all different terminology for the same thing. 

What's next? Ready to process your mortgage? 

When you have a pre-approval and are negotiating on your dream home, your Holo Case Manager is on hand to assist with looking over the sales agreement for you; it's part of the Holo service. So, get in touch, and we can help with your approval today.

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.