Everyone around the world can apply for a home loan in the UAE If you show proper documentation and paperwork. Mortgage loan or home loan is a complicated subject for anyone. So proper research and information is required. In this blog we are going to discuss every detail of home loan documentation, additionally relevant subjects with this topic.
The first question pop-ups on our mind when we are researching this topic is-
What is the whole processing cost for Home Loan in the UAE?
So the answer is, there’s no specific charges for Home loan. It’s calculated on percentage. Processing fee is usually charged as a certain percentage of the loan amount. This percentage is generally in the range of 0.35% to 7%.
After researching and conversing a bit people automatically understand how the processing fee percentage works.
The maximum processing fee for a home loan is usually up to 1% of the loan amount + 5% VAT.
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What is Down Payment?
The down payment helps to reduce the rate of interest and future payments less.
The down payment is the initial amount of money that the borrower contributes towards the total purchase price of the property. Here’s some information regarding down payments for home loans in the UAE:
Minimum Down Payment:
The UAE Central Bank has set regulations for minimum down payments on home loans. These regulations apply to both UAE nationals and expatriate residents.
Recommended reading: Down payment option for home buyers
For properties valued at or below AED 5 million:
For UAE Nationals, the minimum down payment requirement is 15% of the property value.Expatriate Residents: The minimum down payment requirement is 25% of the property value.
For properties valued above AED 5 million:
The down payment requirement for UAE nationals is 25% and expatriate residents is 30% of the property value.
Many people want to apply for a home loan for various reasons.
Eligibility for Home loan UAE resident-
In terms of income, lenders usually require a minimum monthly income threshold to ensure that you have the financial capacity to repay the loan. Your employment stability is also important, as lenders prefer borrowers with a consistent employment history and job security.
No need to worry!! Self employed people like businessmen, Freelancer, Entrepreneur etc are also eligible for home loan. By the end of this article you will get information about that too.
When it comes to the eligibility criteria for a home loan in the UAE, the breakdown are. Banks have to follow a certain set of criteria to offer home loans in Dubai.
Usually, banks in Dubai have four main criteria for home loan eligibility:
- Time spent in the UAE (typically 6 months to a year)
- Length of employment in UAE (typically a minimum of 6 months)
- A business period in UAE (typically 2 to 3 years)
- Credit history
*** Your employer must be listed with the bank. This is a condition for home loan eligibility in Dubai.
Eligibility for Non-Resident in UAE are-
- Lenders typically require a minimum length of employment in the UAE, such as six months to one year.
- You will need to meet the minimum income threshold set by the lender to ensure your ability to repay the loan.
- Lenders assess your debt-to-income ratio to determine if you can manage the additional mortgage payment along with your existing debts.
- A good credit history, both internationally and in the UAE, enhances your chances of loan approval.
Here is a checklist of the documents required to apply for a home loan.
◈ Personal Documents:
- Valid passport copy
- Valid Emirates ID copy
- Visa copy (resident visa or employment visa)
◈ Income and Employment Documents:
- Latest Salary certificate from your employee
- Employment contract or offer letter (maybe required)
- Bank statements for the past six months
- Proof of other sources of income (if applicable)
◈ Property Documents:
- Sales and purchase agreement
- Title deed & Floor plan of the property
◈ Bank Statements and Financial Documents:
- Bank statements for the past six months for all accounts held
- Details of existing loans or liabilities (credit cards, personal loans, etc.)
- Statements or documents related to investments or assets (if applicable)
- Debt obligations or liabilities disclosure statement
- Proof of down payment funds (bank statements, investment statements, etc.)
- Proof of address (utility bill or tenancy contract)
◈ Property Valuation and Insurance:
- Property valuation report (arranged by the lender)
- Insurance coverage details (if required by the lender).
Documents Required for Salaried Individual
Loan Form: Bank loan application form to be filled with passport size photographs affixed.
Address Proof: Leave and License / Registered Rent Agreement / Utility Bill (up to 3 months old), Passport.
Identity Proof: Passport / Driving License / Voter ID / PAN.
Income Proof: 3 month payslips, 2 years Form 16, Copy of Income Tax PAN
Bank Statement: 6 months bank statement that shows salary from the employer and any EMI paid for outstanding debit.
Documents Required for Self Employed–Professionals
Identity Proof: Passport / Driving License / Voter ID / PAN.
Address Proof: License / Registered Rent Agreement / Utility Bill.
Office Address Proof: Property Documents, Utility Bill.
Office Ownership Proof: Property Documents, Utility Bill, Maintenance Bill.
Business Existence Proof: 3 years old Saral Copy, the Company Registration license, Shop Establishment Act.
Income Proof: Latest 3 years Income Tax Returns including Computation of Income, Profit & Loss Account, Audit Report, Balance Sheet, etc.
Bank Statement: Past 1 year bank statement. 1 passport size color photograph.
Documents Required for Non-Residents in UAE
- Valid passport copy
- Valid residency visa copy
- Employment contract or offer letter
- Salary certificates for the past three to six months
- Bank statements for the past six to twelve months (both international and UAE accounts)
- Proof of other sources of income
- Credit report from your home country
- Proof of address in your home country (utility bill, bank statement, etc.)
- Statements or documents related to investments or assets
- Proof of down payment funds
Note: Broker or bank may ask for some additional documents if required. So please keep yourself up to date with the process.
In termination
Hopefully we have covered most of your questions. If still there is anything you need to know you can contact professionals like YOUAE Mortgages to understand the benefit of using a mortgage broker in Dubai.
If you need a mortgage in Dubai then read out this article- A Comprehensive Guide to Getting a Mortgage in Dubai.
