Glossary
This is the break-up between interest and principal of the installment paid through the tenor of the mortgage.
It is common in UAE for Banks to offer a Fixed Rate Mortgage for a specified term, post which the mortgage will convert to a Variable Rate Mortgage.
These are all properties which are not residential and include office premises, retail shops, ware-houses, industrial sheds, labor camps & commercial plots.
A client may choose to buy his own content insurance; this is not a mandatory requirement and it only covers the contents within the property and not the property.
This is another common terminology used and it defines the ratio between the total monthly debt repayments and the income. This is regulated by the UAE Central Bank and is capped at 50% of the Income.
The money that you pay upfront for a house. The minimum down payment requirement is regulated by the UAE Central Bank and it ranges from 20% to 40% of the property value for completed properties. For under-construction properties, it is 50% of the property value.
This is a Government Department that provides various services related to real estate transactions, most notably the documentation of sale transactions, regulation and registration of all transactions.
Depending on your mortgage agreement, there may be a prepayment cost for pre-paying. The maximum fee a Bank can charge is regulated by the U.A.E Central Bank.
Repaying your mortgage ahead of schedule. This could be an extra payment that will reduce the amount of mortgage principal or full repayment of the loan.
This is an interest rate that does not change during the entire mortgage term.
These are a much wider range of areas where a UAE or a GCC national can purchase a property across the U.A.E.
These are designated areas in Dubai where foreign nationals are permitted to purchase properties. Freehold areas are defined by the Dubai Government by order number 3 of 2006. Similarly, there are designated areas in each of the emirates, however they may defer in the freehold ownership structure.
Similar to Freehold, these are areas where foreign nationals are permitted to purchase properties. However, the property is on a long-term lease, usually, 99 yrs and the leasehold rights are recorded with the Dubai Land Department under a Lease Deed.
Also known as Equity Release. This is when an individual or a company owns property without any mortgage and has a requirement of funds and avails of the loan by mortgaging this property.
This is a common banking terminology and it defines a ratio between the Loan Amount and the Property Value. This is regulated by the UAE Central Bank and ranges from 60% to 80% for completed properties. For under-construction properties LTV is 50%.
A loan that you take out on a property. The collateral is the property itself and the loan could be for any purpose.
This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.
This is a formal commitment from the Bank on the loan amount and other terms of the mortgage. This does not include an assessment of the property. Usually, home buyers take a Pre-Approval from Banks post which they search and are able to negotiate on a property as well as commit on a down payment knowing very well that the mortgage approval has been sorted.
Fee charged by the Dubai Land Department for the registration of the mortgage in favor of the bank which has provided a loan against that particular property.
These are mortgages for foreign nationals residing outside of the UAE and seeking a mortgage for a freehold property in the UAE.
This is a fee charged by certain banks at the time of application; most banks adjust the pre-approval fee with the processing fee payable at the time of loan disbursement.
This is the fee charged by the Bank for approval and disbursement of a mortgage.
Insurance to cover the property being mortgaged is a mandatory requirement by all Banks in UAE. However, certain Banks permit clients to buy their own property insurance and assign it to the Bank. This is different from Mortgage Life Insurance.
This is when a client has a mortgage with a particular bank and wants to transfer his mortgage to another bank on better terms. This is usually done by a client when he is on unfavorable terms, which could be Interest Rate, Tenor or Loan Amount and he wishes to negotiate more suitable terms within another Bank.
The fee charged by the Dubai Land Department for the registration of a property in the name of the Buyer / Owner.
The total number of years of the mortgage. The maximum tenor of the mortgage is regulated by the UAE Central Bank.
When a property owner has an existing mortgage and the avails of an additional loan on the same property. This is possible when the loan outstanding is low or when the value of the property has appreciated. The additional funds can be taken to fulfill the requirement of the property owner.
This is the fee paid to the Bank for obtaining a valuation of the property. The valuation is done by an external certified valuation company.
An interest rate that will fluctuate in accordance with the prevailing market prime rate during the mortgage term. The Prime Rate could be EIBOR or Banks internal lending rate. Banks charge a mark-up rate over and above the Prime Rate. This usually remains constant during the variable rate period.
Question & Answers
Yes, certain Banks in the U.A.E offer mortgages to Non Residents of U.A.E, however, they have to offer certain restricted terms such as higher down payment. Usually, a slightly higher rate is charged to Non Residents.
Most Banks insist for a client to open a Current Account with them and set up a direct debit instruction for the repayment.
If all documents are received, we can arrange for a mortgage approval within 2 working days for salaried and 5 days for Self Employed.
Yes, certain Banks offer mortgages to JAFZA registered Personal Investment Companies and also to UAE registered Operating Companies.
Bank Processing Fee up to 1% of the loan amount. Valuation Fee – Between AED 2,500 to AED 3,000. Property Registration Fee of 2% to 4% (can be split between buyer and seller). The mortgage Registration Fee is 0.25% of the mortgage amount. Dubai Land Documentation Fee AED 375/-
Maximum Loan amount varies among Banks and is usually up to AED 25 million, however, depending on your requirement we can arrange for loans for much higher values.
The maximum Tenor of a mortgage is 25 yrs, this may be lower depending on your age.
The minimum age requirement is 21 years. The maximum is 65 yrs. to 70 yrs. at the time of maturity of the mortgage. This depends on the borrower being a UAE National or Expatriate and Salaried or Self Employed.
The down payment requirement is regulated by the Central Bank. For completed properties it ranges between 20% to 40% of the property value, depending on UAE Nationals / Expatriates, Self-Occupancy / Investment. For under-construction properties, a 50% down payment is required.
Banks offer mortgages for UAE Residents – Nationals and Expatriates can avail of a mortgage. Certain Banks in UAE also offer loans to Non Residents.
Mortgage Life Insurance is an excellent product to ensure that your family/dependents are not burdened and would not have to pay for the mortgage installment in case of your demise.
