Factors to Consider When Mortgaging a Home in Dubai

Dubai’s real estate marketing is flourishing with the emergence of luxury residential projects in almost every corner. These projects, particularly waterfront homes, promise an upscale lifestyle that is full of amenities and luxuries.

For a person who has just moved to Dubai, their main aim is to find such a residence, apart from a respectable source of income, and for this, a prominent option for them is to apply for a mortgage. If you also belong to the same group of people and want to apply for a home mortgage, there are numerous factors you must consider.

Let’s take a look at some of them:

Credit Score & History

This is the first consideration you must pay heed to. You must have a fair credit score to be able to secure a loan.

For those not in the loop, it is a three-digit score allotted to every individual based on their credit history. It lies between 300 and 900 and determines one’s creditworthiness. The higher the credit score, the higher the creditworthiness and vice versa. Even if you want to obtain a credit card, having a high credit score forms one of the basic requirements.

In Dubai, it is issued by Al Etihad Credit Bureau. This score is accessed by taking various factors into consideration including, credit history, details about loan payment, phone bill/credit card payments, mortgage instalments, etc. One can get to know about their credit score at AECB’s official website. Bear in mind that you will have to pay AED 31.50 for this purpose. If you also want to access a complete credit report, along with your credit score, the deposited amount should be AED 105.

Banks, in particular, will reject your loan application if you do not meet the criteria set for credit score. However, you can contact private lenders for this purpose. They also cater to applicants having a low credit score. However, they may charge a higher interest rate for such home loans.

Rate of Interest

This brings us to our next important consideration. You have to pay attention to the rate of interest you will be charged on the loan amount. As this amount will be paid alongside the principal value of the loan, it’s important that you secure a loan that comes with the interest rate on the lower side.

For this, compare the rate of interest and other repayment terms offered by different lenders, and decide accordingly.

Be mindful that the rate of interest charged by lenders depends on different factors, other than the credit score of the applicant. For example, short-term loans usually carry a higher interest rate. Long term loans, on the other hand, have a comparatively lower rate of interest.

Repayment Terms

Repayment terms include the number of instalments and the amount that should be paid in each instalment. Carefully go through them before signing on the dotted lines.

In most cases, the borrower has to pay monthly instalments. However, in some cases, it can be quarterly as well. Make sure to choose the amount per instalment carefully. It shouldn’t put you in financial jeopardy every month/quarter.

Employment Stability

You should only apply for a long time if you are completely sure about your employment stability. Firstly, most lenders would reject your loan application if your employment is not stable. In case they have approved, and you end up losing your job in later stages, it can land you in a troublesome situation. Needless to say, you won’t be able to pay your instalments due to not having a job. The interest will keep piling up as well.

So, the best advice is to have a backup plan in place to deal with such unpleasant circumstances.

Final Thoughts

In all, there are certain challenges, but mortgaging definitely presents a helpful opportunity to own a property in Dubai. So, if you plan to live in this emirate for a long time, you can safely apply for a home loan mortgage. Only start looking for properties when you have obtained the pre-approval letter.

Make sure to look for property listings in prominent areas only. You can choose from ready and off-plan properties. Both these options come with certain perks and some drawbacks as well. However, choose the location and project wisely. When it comes to off-plan properties, you can choose Stella Maris Tower in Dubai Marina, while for ready properties, an apartment in Canal View (Business Bay) makes for a perfect choice.


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