A mortgage is a loan given to enable you to purchase a property for residential, investment or commercial purposes. The loan is  secured by the lender against the property you purchase. A mortgage is repaid in monthly installments to the lender, which normally includes a rate of interest/profit  and an amount towards the original amount borrowed.

Flat and reducing rates of interest are two methods of how interest can be calculated on a mortgage.

A flat rate of interest is where the rate of interest to be paid remains the same for the duration of the loan as it is always calculated against the original amount borrowed (principal).

A reducing rate of interest is where the amount of interest to be paid takes into consideration the repayments that have been made, so it is calculated against the remaining loan amount or outstanding balance, rather than the original principal amount.

On occasion, a flat rate of interest may be advertised at a lower, more appealing rate than its equivalent reducing rate. When taking a mortgage It is important to establish with the bank or your mortgage broker whether a flat or reducing rate has been applied.

For an in depth explanation of flat and reducing rates of interest

Security cheques are required by banks in the UAE as they are used in instances where the borrower fails to meet the repayments for the mortgage. Should this happen, the bank will present the cheque and when it bounces they will then be able to initiate a legal case to take possession of the property to repay the outstanding debt.

This is not very different to other countries where the bank will have it written into their contract that they can repossess the property where the client defaults on the mortgage.

A security cheque is a type of guarantee required by every bank in the UAE when they give any type of credit facility including credit cards, personal or car loans or mortgages.

The bank will require you to provide them with an undated cheque which covers the full credit amount as a minimum.

Where your employer pays you a housing allowance, this can be taken into account when you are applying for a mortgage.

For example, if you currently live in company provided accommodation and it is stipulated in your contract or salary certificate that you will be paid a housing allowance should you leave the provided accommodation, then the allowance you will be paid can be taken into account for your mortgage.

You will still be required to have the necessary down payment, but the allowance can contribute to your affordability and therefore can, in some cases, increase the amount you are able to borrow.

Bonus income can be taken into account when applying for a mortgage. If it is a guaranteed bonus which is written into your contract or salary certificate then it is more likely to be accepted, but discretionary bonus can also be considered too.

Off-plan finance is available and is something we can assist with. It is important to note, however, that mortgages for off-plan purchases are often limited to projects which are being undertaken by larger, more established developers.

Yes, both residents and non-residents are able to get a mortgage to finance their handover payment to the developer.

Depending on how much has been paid prior to handover, Mortgage Finder will be able to arrange competitive terms with zero processing and arrangement fees.

Some banks will allow an element of the costs for purchasing a property to be added into the mortgage which helps save greatly on the upfront costs. Our mortgage brokers will be able to advise more on this.

You can find out about the costs of purchasing a property and the fees you may be required to pay as part of the process.

Yes, generally it is quite easy to release equity (or cash) from your property as a non-resident. Similar to a non-resident mortgage, minimal documentation is required for this process and you can release up to 55% of the property value which can be used for other purposes.

Yes, mortgages are available for final payments to the developer. Any payments that have already been made to the developer would be considered part of the down payment.

Banks do charge buildings insurance. This can vary but in most cases this is on the bank’s in-house policy and equates to around 0.05% of the property value, generally charged on an annual basis.

In general most banks will charge a penalty for settling the mortgage early, but this will vary from one back to another.

In most cases the penalty will range from 0% – 3% of the outstanding mortgage balance but this will depend on whether the mortgage is being repaid by your own funds, being sold or being refinanced by another bank.

Whether you can make overpayments on your mortgage in the UAE depends on the bank that you have taken the home loan with.

Generally, most banks have an allowance to make penalty-free overpayments of up to 50% of the outstanding balance as soon as you take the mortgage. If you are on a fixed rate mortgage, in some cases the bank will only allow overpayments after the fixed rate period has ended.

You mortgage broker will be able to provide more advice on this.

A conventional mortgage is where your loan repayments will include paying a rate of interest to the bank, this is their profit for lending you the funds.

An Islamic mortgage differs from a conventional mortgage because under Shariah Law it is forbidden to charge interest on a loan, so in this case banks will buy the property on your behalf and rent or lease it back to you for a profit.

EIBOR is the Emirates Interbank Offered Rate, which is the rate at which banks lend to each other. EIBOR rates change daily and can be checked on the Central Bank website here.

A reversion rate is the interest rate that your mortgage ‘reverts’ to after your fixed rate mortgage period comes to an end. The reversion rate, similarly to a variable mortgage rate, is normally linked to an EIBOR rate with a percentage added by the bank.

A fixed rate mortgage is where the rate of interest you pay on your mortgage is kept the same (fixed) for a certain period of time, which is generally between 1-5 years. Once the fixed rate period has ended, in most cases you are then moved onto a reversion rate.

Variable rate mortgages are when the rate of interest you pay is linked to 1, 3, or 6 month EIBOR with a fixed percentage added by the bank. This means the rate you pay can go up or down over time, depending on EIBOR. For example, if in month 1 EIBOR is 2.5% and the fixed margin your bank applies is 1.49%, then the variable rate you will pay is 3.99%. If in month 6 EIBOR has increased to 3.5% then your variable rate will change to 4.99%.

Speaking to one of our mortgage brokers who will be able to assess your borrowing capacity and take you through the pre-approval process.

The mortgage pre-approval process is the first step in getting a mortgage and can take up to 5 working days. However, it is worth noting that securing pre-approval may take longer depending on the bank used and the complexity of your case.

Once pre-approval has been secured and you have settled on a property that you want to purchase, we manage the rest of the process on your behalf until completion.

We would advise that the first step to getting a mortgage in the UAE would be to speak to one of our mortgage brokers.

We will have an initial consultation with you to assess your situation and your borrowing capacity. Based on this consultation, we will then be able to provide you with recommendations on the best mortgage products for you and take you through the mortgage pre-approval process.

Once you have found a property you would like to purchase and you have finalised this, we will then work with the bank on your behalf to get the mortgage setup in a timely manner and manage the complete process until you take ownership of the property.

Yes, all banks will perform a credit check on you before approving a mortgage. The credit bureau is called Al Etihad Credit Bureau and you can obtain your own credit report by downloading the app and paying a small fee.

Documents required can differ depending on your circumstances, but our mortgage brokers will be able to discuss this with you.

In general we will require the following documents for your mortgage:

• Copy of your passport, visa and Emirates ID
• Salary certificate addressed to ‘Mortgage Finder’
• Last six months payslips and bank statements
• Latest credit card statements
• Proof of your current address – copy of DEWA bill or tenancy agreement

Of course, parents and other family members are allowed to assist with down payment by gifting or lending you the money for this

By Central Bank regulations, you are not allowed to take a personal loan for the down payment. A personal loan to cover the associated fees is allowed though.

If your down payment is too small, it may be worth considering liquidising any investments, borrowing from family or you can look at a smaller property.

The minimum down payment for a property under AED 5million is 20% for an expat or 15% for a UAE national. The minimum down payment for a property over AED 5million is 30% for an expat or 25% for a UAE national.

The amount that you can borrow depends mainly on your income and liabilities. You can use the Mortgage Finder Affordability Calculator to work this out.

For a property purchase price under AED 5million the maximum loan-to-value (LTV) for an expat is 80% and for a UAE national is 85%. For properties over AED 5million, this decreases to 70% LTV for expats and to 75% for UAE nationals.

Mortgage rates can change on a monthly basis, currently rates can start from around 2.99% to 4.99%, depending on the lender and the product type.

The fees in specific relation to a mortgage would be a bank valuation fee and a bank arrangement fee. The bank valuation fee can range from AED 2000 – 5000 and the bank arrangement fee can between 0% to 1.5%, both fees vary depending on the bank.

In Dubai, you will also be required to pay a mortgage registration fee of 0.25% plus a AED 290, which is payable to the Dubai Land Department.

We would say no, but let us explain why.

When approaching a bank directly they will not necessarily have the best mortgage offer for your situation and they will be focused on showing you the benefits of their product.

If you consult a mortgage broker, like Mortgage Finder, our team are able to look at mortgage products across the UAE from different banks to offer you the best one for your situation and also share the pros and cons of them with you, so you can make an informed decision.

A salary transfer means your employer will give an undertaking to the bank that if you were to leave employment for whatever reason (e.g. if you lost your job, moved to another job or even moved outside of the UAE), that any end-of-service gratuity would go to the bank where the salary transfer is being made.

Some banks will give a slightly preferential rate if you undertake a salary transfer to them. Whether these rates are worthwhile is dependent on your situation and our team of expert mortgage brokers will be better able to advise you on this.

The main reason you should get pre-approved is that banks tend to have different appetites for the types of clients they will lend to based on profiles. As a buyer, pre-approval gives you comfort to know that you can look at properties and once you have found the property you want to purchase you will be able to move forward quickly with your bank of choice.

Pre-approval also shows prospective sellers that you are a serious buyer and you are not just window-shopping, this can put you in a more favourable position and assist in negotiations to get a better price.

Mortgage pre-approval is the first step in the mortgage process for buying a property.

It is when the bank reviews your application and issues a letter or email which will state that they have pre-approved you and will lend you the amount requested. This is generally valid for 60 days. This provides comfort that the mortgage approval has been secured on certain terms from the bank and confidence to negotiate on properties safe in the knowledge that matters can be concluded quickly.

It is important that you select a mortgage product which best suits your situation rather than simply going with the product offered by your own bank, as this may not necessarily be the best option for you.

We would always recommend that you speak with an expert mortgage consultancy, like Mortgage Finder, as we have full access to the mortgage products available in the market and we have access to exclusive products too.

A mortgage broker will provide you with unbiased advice and assist you in understanding the full product range that banks are offering. They will share the pros and cons of the various options available and offer their opinion on the best one depending on your situation, so that you can make an informed and educated decision.

Exclusive mortgage products are offers that we get directly from the banks which they will not necessarily offer if you approach them yourself for a mortgage.

The reason some banks are able to offer us exclusive mortgage products is because we work to develop good relationships with them and they realise the benefit of going through a mortgage broker for both you, the end user, and them as the lender.

Examples of the types of offers we might receive from a banking partner include: discounted interest rates, free arrangement and processing fees, lower reversion margins, no requirement for salary transfer and the ability to assign an external life insurance policy . We are then able to forward these exclusive offers on to our clients, depending on which is most suitable for their situation.

In the UAE there are many types of mortgage products available, below are some of the main types:

• Residential mortgages
• Investment mortgages
• Non-resident mortgages
• Commercial mortgages
• Rent only mortgages
• Fixed and floating rate mortgages
• Offset mortgages
• Capital and interest/profit mortgages
• Interest only mortgages
• Fixed payment mortgages
• Land and construction mortgages

All of these are available as conventional or Islamic finance.