Loans and Mortgages in Dubai: A Step-by-Step Overview

This guide explains how home loans and mortgages work in Dubai—from checking your eligibility and choosing between conventional and Islamic finance to getting pre-approval, understanding fees, and completing title transfer. Links to official sources and leading banks are included so you can verify every critical rule before you apply.

Dubai Mortgage Rules: Quick Snapshot

• LTV (Loan-to-Value) for first-time buyers: up to 80% for expats (85% for UAE nationals) on completed homes, subject to bank policy and Central Bank rules.
• Off-plan LTV: capped at 50% regardless of buyer type.
• DBR (Debt-Burden Ratio): your total monthly debt payments must not exceed 50% of income assessed by the lender.
• Early settlement cap: typically 1% of outstanding balance or AED 10,000 (whichever is lower), per Central Bank guidance; bank T&Cs apply.
• Key government fees: DLD transfer fee 4% of price; mortgage registration fee 0.25% of loan amount (+ fixed admin); trustee office & title issuance fees apply.

Always confirm the exact product terms with your lender; banks can be stricter than the regulatory maximums.

Step 1 — Eligibility & Credit Score

Lenders in the UAE assess affordability primarily using the Debt-Burden Ratio (DBR). As a rule of thumb:

Monthly mortgage + other debt ≤ 50% of eligible monthly income.

Your AECB credit score (Al Etihad Credit Bureau) typically ranges from 300–900. Higher scores help you qualify and can improve pricing. You can obtain your score and full credit report directly from AECB.

• Target a clean 12-month repayment history (no late payments/over-limits).
• Lower credit card utilization & close unused revolving credit where prudent.
• Prepare income proofs (salary certificate, 6–12 months bank statements, payslips; company docs if self-employed).

Step 2 — Choose Your Finance Type

Conventional (Interest-based)

Most banks offer fixed-then-variable (e.g., 2/3/5-year fixed, then EIBOR + margin) or fully variable rates. Check the bank’s Key Facts Statement (KFS) for margins, fees, and repricing mechanics.

Islamic (Sharia-compliant)

Common structures are Murabaha (cost-plus sale) and Ijara (lease-to-own). Payments are “profit” or “rent” rather than interest; economics are comparable, but contracts and early-settlement formulas differ. Review profit calculation, purchase option, and any rebate terms in writing.

Fixed vs Variable: How to decide

• Fixed: Payment certainty during the fixed period; review “reversion” to variable.
• Variable (EIBOR-linked): Typically starts lower but moves with rates; budget for rate rises.
• Islamic: Check whether you prefer rental-style (Ijara) flows or cost-plus (Murabaha) and confirm title timing.

Step 3 — Bank Pre-Approval

Secure a pre-approval before house-hunting. It confirms your eligible loan amount, LTV, and estimated pricing. Many lenders issue quick digital pre-approvals; final terms depend on valuation and underwriting.

Step 4 — Pick a Property (Freehold Areas)

Foreign buyers (residents and non-residents) can purchase freehold property in designated areas in Dubai. Work with a RERA-licensed broker; for secondary sales, you will sign the MoU (Form F) and obtain the developer’s NOC before transfer.

Step 5 — Valuation & Final Offer

After you sign the MoU, the lender orders a valuation. The lower of purchase price or valuation typically drives the final LTV. On approval, you receive a final offer letter (FOL) to countersign.

Step 6 — Fees, Taxes & Closing Costs (Typical)

• DLD transfer fee: 4% of purchase price (usually paid by buyer unless negotiated).
• Mortgage registration: 0.25% of loan amount (+ fixed admin/partner fees).
• Trustee office fees: fixed service fee (plus VAT) for processing the transfer.
• Title deed issuance: fixed fee per deed.
• Lender charges: processing fee, valuation fee; life/property insurance; early/partial settlement terms.
• Agency commission: commonly ~2% + VAT (secondary market).

Fees vary by price band, property type, and channel (online vs trustee office). Always request a written, line-item completion statement.

Step 7 — Transfer & Mortgage Registration

On transfer day, you and the seller meet at a DLD-approved Real Estate Registration Trustee. The lender issues manager’s cheques (or e-payments where allowed), the mortgage is registered, and the title deed is issued in your name with the bank’s charge noted.

1. Bank issues final approvals & cheques.
2. Trustee office processes transfer; DLD fees are paid.
3. Mortgage is registered; you receive your electronic title documents.

Step 8 — After You Get the Keys

• Set up direct debit and keep a cash buffer for rate changes (variable/EIBOR-linked loans).
• Review early settlement and partial prepayment rules (caps, free allowances, and notice periods differ by bank).
• Keep insurance (life/property) current; notify your bank before any tenancy or major renovations.

Useful Bank & Government Links

• Central Bank of the UAE (Rulebook): important ratios, LTV/DBR & circulars
• Dubai Land Department: mortgage registration, title transfer, trustee offices
• Al Etihad Credit Bureau (AECB): get your credit score/report
• HSBC UAE, Emirates NBD, Mashreq, Dubai Islamic Bank: product pages, KFS, calculators

FAQs

What down payment do I need as an expat buying my first completed home?

Commonly 20% (i.e., up to 80% LTV), subject to valuation and bank policy. For properties above certain thresholds or additional properties, required down payment rises.

What is the LTV for off-plan purchases?

Regulatory maximum is 50% LTV for off-plan, regardless of buyer category.

How is affordability calculated?

Banks apply the DBR rule: total monthly debt payments (including the proposed mortgage) must not exceed 50% of income assessed by the bank. They may “stress test” the rate.

Can non-residents get a mortgage?

Many banks lend to non-residents (often with lower LTVs, higher rates, and stricter documentation). Check lender-specific programs.

What are typical early settlement charges?

Often capped at the lower of 1% of outstanding balance or AED 10,000, but always check your contract and KFS for exact terms.

Which documents will I need?

Passport/EID, visa, salary certificate, bank statements (6–12 months), payslips; trade license, MOA, audited accounts if self-employed. The bank will provide a full checklist.