Mortgages in the UAE: how they work

Banks and some other licensed lenders offer residential mortgages. The Central Bank sets maximum loan-to-value limits, and those limits differ according to whether the borrower is a UAE national or an expatriate, whether it is a first or a later property, the property’s value, and whether it is bought off-plan. The Central Bank also caps how much of a borrower’s income can go on debt repayments. We do not quote limits here because they change. Ask lenders for the current figures in writing.

Beyond the regulatory limits each lender applies its own criteria on income, existing debts, employment, age at the end of the loan and the property itself.

Non-residents can often borrow but usually face tighter limits and more documentation than residents, and fewer lenders will consider them. If you are overseas, speak to a mortgage specialist early, since your country of residence and income source affect which lenders will engage.

A pre-approval is a lender’s indication of what it may lend, based on your documents. It is not a final offer. Once you choose a property the lender commissions its own valuation, and lenders commonly base the loan on the lower of the price and that valuation. A valuation below the agreed price leaves you to fund the gap, so do not sign a binding contract before you understand this.

A fixed rate holds the rate for an initial period and gives you predictable payments. A variable rate follows a benchmark, commonly the Emirates Interbank Offered Rate (EIBOR) plus a margin, and your payments move as that benchmark moves. Many products fix for a period and then revert to variable. Ask what happens when the fixed period ends and what it costs to switch or settle early.

Lenders typically require property insurance and often life insurance, and the mortgage is registered against the property at the land registry. Settling early may carry charges; check the terms before you borrow.