Now is the time to investigate property mortgage options in Dubai

Did you know it is possible to increase your buying potential by up to 24 per cent when you purchase property with a mortgage in Dubai? This is something buyers and real estate agents are often unaware of, but is something that can make a huge difference and make investing more achievable.

The mortgage process in the UAE is still confusing for many. Often potential buyers do not understand the process or have heard false accounts about how it works. However, mortgage products have never been so competitive, and the market has also seen significant changes in the past few years, making it more accessible and attractive.

The most notable change was the 5 per cent increase in loan-to-values for first-time buyers introduced in 2020. This means that banks can now lend buyers 5 per cent more, therefore reducing the down payment required for a mortgage from 25 per cent to 20 per cent for non-nationals and from 20 per cent to 15 per cent for UAE citizens. With the down payment requirement being one of the most significant hurdles to buying, this decrease makes a big difference. As an example, if purchasing a property of Dhs1m, this reduction means a saving of Dhs50,000 in cash required upfront.

In addition to the changes in loan-to-value ratios, mortgage interest rates have also become more competitive. The current lowest three-year fixed rate now sits at 2.49 per cent compared to 3.33 per cent in early 2020.

All of this makes getting a mortgage better for buyers. However, the final area which can make a massive difference is the ability to include the fees associated with buying within the mortgage. Many buyers forget the fees that come when purchasing property, such as Dubai Land Department fees and agent commissions. In Dubai, the fees add up to approximately 7 per cent of the property value.

The good news is that it is possible to include nearly 5 per cent of fees within the mortgage. So, for those that do not have this cash ready, it removes some of the burden, as you only require approximately 2 per cent of the property value to cover the fees.

For those who do have the cash for the fees, the news is even better. By including the fees within the mortgage, then adding the cash saved here to your down payment, you could see your buying potential rise by up to 24 per cent. For example, if you have a down payment of Dhs500,000 plus the 7 per cent in fees ready, then you can purchase a property of Dhs2.5m. Opting to include the fees within the mortgage and adding the cash saved from this to your down payment could see your buying potential rise to Dhs3.1m.

Given the recent increase in property values across several prime areas in Dubai, including the fees in your mortgage could make buying that dream home a reality. This, coupled with the added benefit of mortgage interest rates in the UAE being at the lowest in years, means there has never been a better time to investigate your mortgage options.

Brendan Kennelly is a senior mortgage consultant at Mortgage Finder 

Taken from Property Finder’s Prestige special report in Gulf Business’ August issue