Real estate in Dubai is booming. Whether you are looking to buy a property for yourself or as an investment, buying in Dubai is a great idea. Ask any mortgage consultant in Dubai and they'll tell you the city has a lot going for it.
- Property prices in Dubai are competitive compared to cities like London, New York, and Singapore.
- Dubai's economy is growing and stable.
- The city is considered one of the safest in the world.
- Residents enjoy a tax-free income, and
- With year-round sunshine, it's easy to understand why it attracts expats from all over the world.
There are a lot of misconceptions about buying property in Dubai. We asked our expert team to share the misinformation they come across the most when talking to customers. Here we'll debunk some of those myths for you.
You'll need a large deposit
You will need a deposit to get a UAE mortgage. How much you can borrow depends on whether you are looking to purchase as a resident or non-resident; expat or UAE national. It will also depend on your liabilities and income.
If you are an expat and the property value is under AED 5 million, you'll need a 20% deposit. If you're a UAE national, you'll need a 15% deposit. If the property value is over AED 5 million and you're an expat, you'll need a 30% deposit or 25% as a UAE national.
Whether you're looking for a UAE mortgage as a non-resident or resident, expat or UAE local, a digital mortgage platform like Holo will help you explore the best options and rates in the market for you.
Mortgage Consultant and Real Estate Agent fees are high
It's true that there are fees involved in buying a new home in Dubai. If you use a mortgage broker, they will typically charge you between AED 2,000 and AED 5,000.
Using an online mortgage platform like Holo though is 100% free. You'll be assigned your own expert mortgage consultant and theybll do all the heavy lifting for you.
There are other fees associated with buying a home. These fees include:
- 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: The 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 transfer
- Real Estate Fee. 2% of property value + VAT: This is a fee charged by your Real Estate Agent for their services
Some banks will allow you to add a portion of the fees to the mortgage loan amount you want to borrow. Using a mortgage calculator in Dubai will help you get an understanding of how much you could borrow. Adding the cost of the fees to your mortgage means you'll borrow more over a longer period of time, but the upfront cost of your new home will be lower.
Buying a property in Dubai is more expensive than renting
Untrue. Many expats stay in Dubai for a few years, but some choose to make it their forever home. Buying is a longer commitment to a property than renting a home but if you are planning on staying in the UAE as a long-term resident, then buying could work out to be more cost-effective.
It is true you will need a deposit and have fees to pay upfront. But when you own your home, the money you pay towards it every month is paying off your mortgage. When you rent, that money is going to someone else.
If you're still not convinced, why not use our online Mortgage Calculator? This will help give you an idea of what a monthly mortgage repayment for you would look like. It's free to use and takes less than two minutes.
Your bank will give you the best mortgage deal
This one is a very common misconception and it's easy to see why it's tempting to automatically make your application for a UAE mortgage with your bank. After all, you already have a relationship with them, an existing account and you likely trust them. However, there are hundreds of mortgage products out there and your bank might not necessarily have the best deal or best rate for you, so don't be scared to shop around.
Researching your options will take time, but don't worry, let us do it for you. Holo has mortgage products available from all the UAE banks so we will be able to get you the best deal for you and your circumstances. And because we're free, we'll save you time as well as money.
You need a perfect credit score
You don't need a perfect credit score to be accepted for a mortgage, but it will need to be healthy. Make sure your bills are always paid on time and try to reduce your credit card debt and existing personal loans. If you are serious about buying a home, now is not the time to be increasing your credit card spend. In fact you should make sure that you don't spend more than 30% of your credit card limit.
A lower credit score will not automatically prevent you from obtaining a mortgage; a higher score may get you more preferential interest rates on your mortgage. You can check your credit score in the UAE with the AECB (Al Etihad Credit Bureau).
Getting a mortgage in the UAE does not need to be stressful. With the right information and a good understanding of the costs involved, you can make an informed decision. Remember Holo is here to help you every step of the way.
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.