Dubai Mortgage Guide: Calculate Your Borrowing Capacity for Real Estate

Promotional graphic for a detailed guide to Dubai real estate mortgages by Nautilus Properties, featuring a modern kitchen interior.

Understanding Mortgage in Dubai: How Much Can You Borrow?

Are you considering buying real estate in Dubai and wondering, “How much can I borrow with a mortgage?” Understanding the mortgage process in Dubai is crucial for making informed decisions. In this guide, we’ll break down the key factors that influence your borrowing capacity and provide insights to help you navigate the Dubai mortgage landscape.

Key Factors Impacting Your Mortgage Borrowing Capacity

When determining how much you can borrow for a mortgage in Dubai, several factors come into play. According to the Central Bank of the UAE, the maximum mortgage you can obtain is based on two main factors:

  1. Annual Income: A mortgage can be no greater than seven times your annual income, equivalent to 84 months.
  2. Total Liability Repayments: Your total liability repayments, including mortgage payments, car loans, personal loans, and credit card payments, cannot exceed 50% of your salary.

Calculating Your Borrowing Capacity

To accurately calculate how much you can borrow, you can use an affordability calculator. This tool takes into account your monthly income, debts, and upfront payment capacity to provide an estimate of the properties you can afford.

Top Tip: Seek advice from an expert mortgage advisor to get independent and impartial guidance on your mortgage options. They can help you understand the terms, conditions, and fine print, ensuring you make an informed decision.

Loan-to-Value Ratio in Mortgages

The loan-to-value (LTV) ratio is a crucial metric in mortgages. It measures the amount you can borrow compared to the property’s value.

Formula: Loan-to-Value Ratio=Loan AmountProperty Value×100Loan-to-Value Ratio=Property ValueLoan Amount​×100

Example: If a property is valued at AED 2,000,000, with a maximum LTV of 80%, you can borrow up to AED 1,600,000. This means you need to finance the remaining 20% yourself. The LTV ratio can vary based on the lender’s and borrower’s financial profiles.

Couple discussing mortgage options with a mortgage advisor in a modern Dubai office.
A couple consults with a mortgage advisor in a modern office overlooking the Dubai skyline, including the iconic Burj Khalifa.

Maximum Loan-to-Value Ratios

  • Expats: Up to 80%
  • Emiratis: Up to 85%
  • Off-plan Properties: Up to 50%, depending on the construction stage and developer’s reputation.

Associated Fees When Buying & Mortgage in Dubai

When purchasing property in Dubai, consider additional fees such as:

  • Dubai Land Department Fees: 4%
  • Agent Fees: 2%
  • Property Valuation Fees
  • Insurance Costs

Some lenders offer options to include these fees in your mortgage, spreading the payments over the loan term and making it more manageable.

Salary and Monthly Mortgage Payment Ratio

The ideal ratio between your salary and total monthly liabilities should not exceed 50%. This includes:

  • Existing mortgage payments
  • Credit card payments
  • Personal loans
  • Car loans

Maintaining this ratio ensures your mortgage payments are manageable and leave room for other essential expenses. It also helps in maintaining financial stability, allowing for savings and other expenditures.

Luxurious modern villa in Dubai with palm trees and a swimming pool
A stunning modern villa in Dubai, surrounded by lush palm trees and featuring a spacious balcony and a beautifully landscaped garden with a swimming pool

Maximum Loan Term in the UAE

The maximum loan term in the UAE is 25 years, or up to age 65 for salaried employees and 70 for self-employed individuals. If the employer has no set retirement age, some banks may allow a term up to age 70 for salaried employees. Longer loan terms lower monthly payments but increase overall interest payments.

Property Valuation and Loan Amount Correlation

The property valuation, conducted by a qualified valuer, estimates the property’s worth. Lenders base the loan amount on the lower value between the purchase price and the property valuation.

Stress Test for Mortgage in Dubai

The stress test ensures you can handle mortgage payments under challenging situations. It considers:

  • Income
  • Expenses
  • Debts

Your mortgage payment at the stressed rate should fall within 50% of your monthly income. If not, you might need to reduce credit limits or clear existing liabilities.

FAQs About Mortgage in Dubai

Q1: Can I get a home loan with a 2,000 AED salary?
A: No, you need a minimum salary of 10,000 AED to qualify for a home loan in Dubai.

Q2: Is it easy to get a loan in Dubai?
A: It depends on your circumstances. Employees with a stable job, good credit history, and a salary can find the process straightforward.

Q3: What are the requirements to get a mortgage in the UAE?
A: You need a salary of at least AED 10,000 per month, be at least 21 years old, and there are no nationality restrictions.

Q4: What is the minimum salary for a home loan in the UAE?
A: The minimum salary requirement is AED 10,000 for both nationals and residents.

Q5: Can you get a 25-year mortgage in Dubai?
A: Yes, the maximum duration for a mortgage loan is 25 years for both nationals and residents. For non-residents, it’s capped at 15 years.

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