UAE mortgage rates guide for 2024

UAE mortgage rates guide for 2024

02 February 2024, Middle East Economy

This year, experts forecast that more people will buy homes in the United Arab Emirates (UAE). This move is attributed to predictably lower UAE mortgage rates in 2024.

As the dirham is pegged to the US dollar, the country’s monetary policy will follow the U.S. Federal Reserve when it lowers its interest rates. The UAE could cut rates by up to 100 basis points. A drop in interest rates means homes become more accessible and affordable.

If you are planning to buy a home in the UAE, here’s what you need to know.

What is a mortgage loan?

A mortgage loan is a type of loan that you use to purchase a property. A lender gives it — usually a bank or a financial institution — to a borrower, who must pay it (plus interest) over time. If you cannot make regular payments, the property (which acts as the collateral) will be foreclosed. Foreclosing is the lender’s way of getting their money back.

Things to know about mortgages in the UAE

Getting a mortgage is a big financial step. Nevertheless, it allows you — whether you’re an Emirati or an expatriate — to own a home or invest in real estate by spreading the cost over many years. Specifically, in the UAE, it is the Central Bank that regulates the mortgage market. Their major roles include ensuring transparency, protecting consumers, and protecting market stability — and they do so by thorough monitoring and implementation of guidelines.

If you want to borrow money to buy a home in the UAE, you must meet certain eligibility criteria. These typically include being above a minimum age, earning a stable income and meeting a debt-to-income ratio.

Additionally, the amount you can borrow is capped by the so-called Loan-to-Value (LTV) ratio. If a property is worth less than AED5 million, you can borrow up to 85 percent of the property’s value. This means you need to pay a minimum deposit of 15 percent. Meanwhile, for properties over AED5 million, you can only borrow up to 75 percent of the value, requiring you to pay a larger deposit of 25 percent.

Moreover, interest rates on the money you loaned can be fixed or variable, with loan terms extending to 25 to 30 years. Note that all this can still vary per lender.

UAE mortgage rates for 2024

Offering a snapshot of the country’s mortgage market, here are some of the most prominent banks and financial institutions and their mortgage offerings. The rates mentioned are based on the latest advertised figures.

RAKBANK Home In One

RAK Home Loan, which combines your current and home loan accounts, is an innovative mortgage solution where your interest rates decreases with higher deposits. Subsequently, this shortens your loan tenure. Moreover, this flexible setup allows you to withdraw your balance whenever necessary. It comes complete with a debit card, checkbook and online banking.

Highlights:

Reducing rate (as advertised): Starting from 4.24 percent per annum (pa)
Processing fees: 0.525 percent of the financed amount (none for buyout)
Property fees: AED1,942.50
Early settlement fees: 1 percent of the outstanding amount or AED10,000 (whichever is lower)
Partial settlement fees: 25 percent per year of capital balance without penalty
Minimum salary requirement: AED 5,000
Minimum length of service required: 6 months for salaried and 2 years for self-employed
Minimum down payment:
For the first property (If the property price is less than AED5 million): 20 percent for UAE nationals, 20 percent for expatriates
For the first property (If the property price is more than AED5 million): 30 percent for UAE nationals, 35 percent for expatriates
For the second property: 35 percent for UAE nationals, 40 percent for expatriates
Fee financing: Up to 4.5 percent of the fees financed, same rate and term of the mortgage

Other details:

Islamic finance: No
Maximum term: 25 years
Available for: Ready properties in Dubai, Abu Dhabi and Ras Al Khaimah. You can also use it for under-construction properties in Dubai.
Life Insurance (compulsory): 0.0242 percent per month (on outstanding balance)
Property Insurance (compulsory): 0.035 percent pa

CBD Mortgage Loan

CBD Mortgage Loans is the offering to avail if you need diverse real estate financing options — from buying homes to refinancing for better terms. They support UAE nationals and expatriates with tailored solutions, including investment plots. With loans up to AED20 million, flexible repayment periods and competitive rates, your dream of achieving your property goals is a step closer.

Highlights:

Reducing rate (as advertised): Starting from 4.99 percent pa (fixed for 3 years)
Flat rate: 3.10 percent pa (calculated as per 25 years tenure)
Processing fees: 0.525 percent of the financed amount (minimum AED 5,250), none for buyout
Property fees valuation: AED3,150 (50 percent waiver on disbursement)
Early settlement fees: 1 percent of Outstanding Loan or AED10,000 (whichever is lower)
Partial settlement fees: Flexibility to repay up to 15 percent of your outstanding balance per annum without penalties
Minimum income requirement: AED12,000 for salaried, AED20,000 for self-employed
Minimum length of service required: 6 months for salaried; 3 years for self-employed
Minimum down payment:
For the first property (If the property price is less than AED5 million): 20 percent for expatriates
For the first property (If the property price is greater than AED5 million): 35 percent for expatriates
For the second property: 40 percent for expatriates
Fee financing is also possible

Other details:

Maximum finance amount: AED20 million
Islamic finance: available
Maximum term: 25 years
Available for: All ready villas or apartments registerable with the Lands Department and for approved off-plan properties
Life insurance (compulsory): 0.01167 percent of the finance amount per month
Property insurance (compulsory): 0.04 percent pa

HSBC Bank Mortgage Loan

HSBC Home Loans offers hassle-free, cost-effective financing options. In particular, their Variable Rate Mortgage adjusts with the EIBOR. Additionally, it features benefits like no early settlement charge after 3 years and discounts for eco-friendly properties. EIBOR, or the Emirates Interbank Offered Rate, is the benchmark interest rate for lending in the UAE. Meanwhile, HSBC’s Fixed-rate Home Loan ensures stable monthly repayments for up to 5 years, transitioning to a variable rate after that, with perks like overpayment flexibility and discounts for sustainable properties.

Highlights:

Reducing rate (as advertised): Starting from 5.10 percent pa
Processing fees: 0.525 percent of the financed amount (none for Buyout)
Property fees: AED2,625
Early settlement fees: 1 percent of the outstanding amount or AED10,000 (whichever is lower)
Partial settlement fees: 25 percent per year of capital balance without penalty
Minimum salary requirement: AED15,000
Minimum length of service required: 6 months for salaried; 2 years for self-employed
Minimum down payment:
For the first property (If the property price is less than AED5 million): 20 percent
For the first property (If the property price is greater than AED5 million): 30 percent
For the second property: 40 percent

Other details:

Islamic finance: No
Maximum term: 25 years
Available for: Ready properties in Dubai and Abu Dhabi
Life insurance (compulsory): Independent life insurance through Zurich and is only arranged by the bank
Property insurance (compulsory): 0.035 percent pa

Emirates NBD Home Finance

Emirates NBD Home Finance presents an attractive home loan solution if you want to buy property in Dubai or Abu Dhabi. With the opportunity to finance up to 80 percent of your property value, this package is ideal for those seeking significant finance amounts and the security of fixed-rate options.

Highlights:

Reducing rate (as advertised): 4.99 percent pa
Flat rate: 3.10 percent pa (calculated as per 25 years tenure)
Processing fees:
No Salary Transfer: 1 percent if choosing the 3-year fixed rate; 0.75 percent for the 5-year fixed rate; none for the variable rate.
Salary Transfer/ Buyout: 0.75 percent if choosing the 3-year fixed rate; 0.50 percent for the 5-year fixed rate; none for the variable rate.
All Other Segment: 1 percent if choosing the 3-year fixed rate; 1 percent for the 5-year fixed rate; none for the variable rate.
Property fees valuation: AED3,000 + VAT (this is refundable if taking the variable rate)
Early settlement fees: 1 percent of the outstanding amount or AED10,000 (whichever is lower)
Partial settlement fees: 20 percent of the outstanding free
Minimum salary requirement: AED15,000
Minimum length of service required: 6 months for salaried; 2 years for self-employed
Minimum down payment:
For the first property (If the property price is less than AED5 million): 20 percent
For the first property (If the property price is greater than AED5 million): 30 percent
For the second property: 40 percent

Other details:

Maximum finance amount: AED25 million
Islamic finance: No
Maximum term: 25 years
Available for: All properties with a title deed in Dubai and Abu Dhabi
Life insurance (compulsory): 0.016 percent of the finance amount per month
Property insurance (compulsory): 0.12 percent pa (on property value)

First Abu Dhabi Bank Mortgage Loan

The UAE’s largest bank offers mortgage financing for the purchase of listed properties in Abu Dhabi and Dubai. Its major advantage includes the availability of high finance amounts with unique rental income products. Additionally, though only marginal, the FAB mortgage loan has the highest reducing rate in this list.

Highlights:

Reducing rate (as advertised): 5.24 percent pa (Fixed period available for 1 year, 3 years or 5 years)
Flat rate: 3.18 percent pa
Processing fees: 0.525 percent of the financed amount; none for Buyout cases
Property fees: AED3,150
Early settlement fees: 1.05 percent of the outstanding amount (maximum cap is AED10,500)
Partial settlement fees: 1 percent of the amount partially paid
Minimum salary requirement: AED15,000
Minimum length of service required: 6 months for salaried; 2 years for self-employed
Minimum down payment:
For the first property (If the property price is less than AED5 million): 20 percent
For the first property (If the property price is greater than AED5 million): 30 percent
For the second property: 40 percent

Other details:

Maximum finance amount: AED20 million
Islamic finance: No
Maximum term: 25 years
Available for: Listed properties in Dubai and Abu Dhabi
Life insurance (compulsory): 0.0112 percent per month (plus VAT) on outstanding balance
Property insurance (compulsory): 0.0525 percent pa (plus VAT) on property value

Final thoughts

There are plenty of other options you should explore. Various banks in the UAE offer competitive rates, flexible terms and tailored solutions for both nationals and expatriates. There has never been a better time to consider purchasing or investing in a property in the country. And with UAE mortgage rates expected to become more favorable in 2024, the country’s real estate sector becomes even more attractive.

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