Off Plan Property Mortgage Requirements in Dubai

When you purchase a house or apartment off plan, you do it prior to construction and can only access the drawings. Purchasing a home off plan has many benefits, including a brand-new house, a fixed budget, and a personalized finish. 

The quantity of off plan transactions—both cash and mortgage in Dubai—recently surpassed that of the secondary market, or “ready market”. The primary benefit is typically a cheaper cost. Developers often set the price of off-plan and under-construction properties 10% to 30% lower. 

As the project nears completion, the price (often) increases. There is no denying that the market for off-plan properties in Dubai has been active recently. Buyers are keen to take advantage of the main developers’ historically unprecedented terms and payment schemes. The majority of buyers are unsure about financing, despite off-plan real estate’s enormous appeal.

How is off plan real estate financed in Dubai?

After completing 50% of the construction, you must pay the developer 50% of the property cost out of your own pocket, and then you will be eligible for a mortgage(This amount may vary depending on the developer).

The loan-to-value ratio is the name given to this ratio. In essence, this means that if a property is bought for AED 1,000,000, the bank will only lend up to AED 500,000 against it, or 50% for off-plan purchases and 75% for the ready property.

The same is true for residents of the UAE and foreigners.

• Banks provide mortgages with interest rates of 4.50% to non-resident applicants. Based on the 3-month EIBOR rate, it has a set interest rate.
• When buying a home in the UAE, additional fees related to a real estate transaction, such as the price of the property appraisal, real estate commission, land transfer, and mortgage registration fee, must be taken into account.
• If many mortgage applications are submitted simultaneously for the same property, creditors will be ranked and mortgages will be approved depending on the applicant’s credit score.
• In order to register the transfer of title in Dubai, the buyer and seller must meet with the Department of Land or a fiduciary of the property.
• The Dubai Land Department (DLD) will provide you with a written or electronic mortgage document when you register with it, which you can use to compel payments from third parties.

However, if you’re satisfied with the figures and wish to obtain cash at a low mortgage rate, it’s another possibility. It is advised that you pick a strategy with which you feel confident and committed, one that will enable you to save or look into alternative investments once the building is finished.

Also Read : Frequently asked Questions about Off Plan Properties in Dubai 

Mortgage Requirements in Dubai

The mortgage market in Dubai expanded by 68% in the first three quarters of 2021 and by 71% more than in 2019 according to the most recent Mortgage Finder data. One of the reasons for this rise in demand is the low mortgage rates, which were 5.2% in 2019 and are now 3.7%.

We have therefore chosen to walk you through every aspect of mortgages in Dubai to help you find the most appropriate mortgage offer depending on your tastes and budget. Let’s take a look at it in detail.

• Credit score

When you submit an application for a loan, the bank will check your credit score. Even though banks do not establish credit score restrictions, the credit score has a significant impact on whether your application is accepted or rejected as well as the terms and conditions offered.

For instance, if your credit score is below 400, the majority of banks in Dubai will reject your loan application. However, some organizations will not take a credit score of less than 500. The general credit score range in Dubai is as follows.

• Income

The minimum salary needed to buy an off plan property in Dubai will vary depending on your desired property type and location because Dubai is home to both economical and luxurious houses.

For smaller investors, Dubai boasts a sizable selection of apartments at reasonable prices. Let’s look at the minimum wage needed to purchase affordable apartments in Dubai. Remember that the mortgage payment is limited to less than 50% of your gross monthly income.

• Down Payment

Most Developers in Dubai usually ask for a down payment of 5–20% (varies by the developer) to book your dream home. The remaining sum may be paid both during construction and at or after handover, depending on the payment schedule. The fact that off  plan real estate is fresh new, equipped with state-of-the-art technology, design, and lifestyle features, as well as on-site amenities, is another benefit.

How to Apply for a Mortgage in Dubai?

You can be a non-resident or resident of the UAE and be at least the age required by the lenders in order to be eligible to apply for a mortgage in Dubai. It is advised that you get in touch with your preferred bank in advance to talk about the required monthly income amount because this is probably governed by the bank’s lending policy.

Banks prefer to cooperate with applicants who have a domicile in the emirate, therefore the number of mortgage alternatives available to people with eligible criteria. The process is quite straightforward once you have gathered all of the required paperwork and applied to the bank:

• The bank is required to provide you with a letter of pre-approval beforehand. Typically, it takes three to five business days to issue.
• After receiving your mortgage pre-approval, a list of the top selections based on your permitted borrowing amount will be delivered to you.
• The down payment must then be made and the loan agreement must be finalized. A loan payback schedule will also be given to you.
• On the last day of the transfer, the bank will provide the seller with your loan amount.

Both salaried and non-salaried persons are eligible for applying for an off-plan Mortgage in Dubai. 

Conclusion

When it comes to off plan properties, the bank will also have certain restrictions on the kinds of properties it will finance. The availability of numerous fair post-handover payment plans for off-plan developments may be helpful to buyers.

If you have an idea of buying an off plan property in Dubai, approach Best Real Estate Company in Dubai ,Homesphere  for a detailed overview. By using cutting-edge technology and ensuring excellence in returns, safety, and service, we add value for investors.

To find out more about how we can help you with buying off-plan properties, get in touch with us!