Experts Explain How Banks In The Country Finance Down Payments On Real Estate.

Real estate buyers in the UAE are increasingly choosing cash purchases over mortgages as interest rates climb. In the first half of 2022, interest rates increased 1.75% in the UAE, according to the most recent Betterhomes study. According to the report, 31% of real estate transactions in H1 2022 financed by mortgages, down from 36% during the same period in 2021. Mortgage Dubai lending is easily accessible to expats. With more than 20 financial institutions now providing more than 2,500 various mortgage products/rates.

Andrew Cummings, Partner – Head of Prime Residential, says for first purchases, the maximum lending amount on properties over Dh5 million is 70% of the property value. Which increases to 80 percent for properties with a value below Dh5 million.

Some banks also provide fee financing, meaning borrowers can finance up to an additional 5 percent to fund transfer/agent fees. For second purchases/investment properties, the maximum lending amount is 60 percent. In addition, for under-construction properties is 50 percent, regardless of the property value.

Do banks in the UAE also finance the down payment? Cummings says technically, no. Personal loans are a sort of unsecured credit that can be used to fill funding shortfalls. However, the payback period is shorter and the interest rate charged is often greater than mortgage rates. As a result, it is not the most effective or economical method of funding the down payment. Personal loans taken out in the UAE will also appear on your credit report. Which will take into account when determining your ability to pay for a mortgage. Meaning your maximum available Mortgage Dubai lending amount will be reduced.”

Do banks in the UAE also finance the down payment? Technically, no, according to Cummings. Personal loans are a sort of unsecured lending that use to fill financing gaps. However, because they often have higher interest rates than Mortgage Dubai rates and shorter payback terms. They are not the most effective or economical way to finance a down payment. Additionally, personal loans in the UAE will appear on your credit report and will take into account when determining your ability to pay for a mortgage. Which will lower the maximum amount that can be borrowed.