Real Estate

Steps to Mortgage for Non-Residents

By 10/11/2021No Comments
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Steps to Mortgage in Dubai for Non-Residents

It is indeed everyone’s dream to own a house in Dubai. Having a home provides you with a sense of security and assurance that you will always have a roof over your head. Therefore, it is the wish of most Non-Residents to purchase a house in a foreign land. But it is not an easy thing, and the most important thing needed is the necessary fund for purchasing. In that case, Non-Residents can go for availing mortgage.

There are specific steps to receive a mortgage which is discussed below:

1. Look for a lender

If you are from Dubai, you can apply for a mortgage in the bank, and you need to have a registration with the Dubai Land Department (DLD). Then, you can approach the bank for their accessible mortgage, or you can hire a broker who will do the work for you.

Mortgage dealers have a critical understanding and information of the mortgage market and accessible home loans that could work for you. So, they take all the worries regarding sanctioning the mortgage, and you can focus more on getting the right home.

2. Select the accurate mortgage for you

Mortgages are of different types – fixed-rate and variable-rate mortgages. There are many factors you need to consider while choosing the right mortgage plan for you. These incorporate, yet aren’t restricted to:

  • Your way of life
  • The kind of property you need to purchase
  • The amount of loan you need
  • The deposit amount you can pay

Most banks have their internet-based mortgage calculator to input your variables and estimate the monthly installment. That will also include the applicable interest rate of the place.

3. Get the pre-authorized letter

Getting a pre-authorized letter is very significant for applying for a mortgage. It is an official letter given by the bank which acts as a proof for the approval of your mortgage. In addition, it mentions the maximum borrowing limit permitted to you. Usually, it takes around three to five working days to get this pre-authorized letter for your home loan.

4. Look for your desired home

Once you have your financial plan and the pre-authorized letter, it’s time to look for your ideal home. The letter generally is valid for 60 to 90 days, depending on the bank, which gives you enough time to search for your perfect home. However, people like to find their house first and then apply for the mortgage in some cases. It may work; but, you will most likely be unable to get the whole amount of house money required to purchase the property at that time.

5. Finalize your property buying

After finding your property, it is time to go to the bank to finalize the loan amount. The bank might appoint a property evaluator to check the worth of your ideal property and assist you with making a decent proposal on it.

When you and the seller agree on a price, you can pay your deposit amount and agree on a date for the buying exchange. Then, on the day of property transfer, the bank will deliver your credit amount to the merchant, and you own the property.

mortgage documentation

Necessary documents for mortgage loans for Non-Residents in Dubai

While applying for mortgage loans as a non-resident, you are required to submit certain documents. Also, you may need to submit some additional documents based on the property you are buying along with the terms of the transaction.

However, overall, non-resident applicants need to submit the following documents:

  • Valid identification (as identity verification)
  • Statements of Bank (of last 3 to 6 months as verification of funds)

There are some additional documents that you may have to submit like:

  • Tax returns (if relevant)
  • Salary declarations or payslips (in case you are a salaried person)
  • Trade permit and evaluated financial summaries (in case you are independently employed)
  • Details of any current loan

Features of Mortgages for non-residents

While taking a mortgage helps you purchase your dream house, there are some other features for non-residents. Below-mentioned is the details:

  • Interest Rate: It relies upon the bank you approach for the home loan. An interest rate ranging from 4.5% to 6.5% per annum is charged depending on a reducing amount.
  • Mortgage Amount: The specific sum a bank offers is determined by the income. A few banks will present up to AED 20 million to purchase your properties.
  • Loan Value: Most banks offer from half to 75% financing to non-inhabitants.
  • Tenure: The residency of home loans can be for at least 25 years.

How is mortgage affordability determined?

It depends on the bank. Various banks will calculate mortgage affordability differently. Whatever it is, there is a standard guideline of thumb that states just half of your monthly payment will be considered while calculating the mortgage.

Then, from the 50%, the bank deducts other credit obligations (if any, like personal loans, car loans, and around 5% of your credit card limits) to determine your extreme affordability.

After that, the bank will do a stress test by applying a stress rate of interest, ranging from 3.5% to 8%.

The point of this is to confirm whether you will be able to bear the cost of your mortgage repayment or not if, in any case, the financing costs increase to the test levels.

However, if you have been living in Dubai for quite a few years, you can have your house there and make your settlement plans. The foreign residents can enjoy the benefit to sell, purchase and even rent their property in Dubai. In any case, it is just in the assigned zones laid out by the public authority of Dubai that the non-residents can buy property on a freehold basis.

Purchasing a new house as a non-resident is a lot of work to do. Above all, it is the permission from the authority and the sanction of your mortgage for it.

Numerous non-residents are purchasing properties in Dubai consistently, settling down there, and planting their roots in its soil. In the end, it is the personal choice, decision, and the accessibility of capital to choose a new life in Dubai.