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Home / Features / Applying for a mortgage in Dubai. Factors to consider

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Applying for a mortgage in Dubai. Factors to consider

If you are planning to apply for a mortgage to buy your dream home, it essentially is a commitment that you are planning to abide by for a long term. As such, perseverance and working out a well planned repayment method is of utmost importance so that your credit report does not get tarnished and you still stand a good chance to avail loans in the future, and most importantly at good rates.

In this article, mortgage rates and personal loan rates have been discussed in brief. So, read on through the following paragraphs for a better insight.

Tracking past trends

As of 2016, it was observed that at least 6 out of 10 home loans were offered to prospective borrowers at reducing rates and usually ranged between 3% and 4%. This holds true for almost all places across United Arab Emirates. In fact, experts are of the opinion that 10% of all the mortgages that were applied for were extended at rates that were 10% or lower.

Qualifying for a loan

Aside from rates of interest, you will also have to find out whether or not you qualify for loans, regardless of whether you are opting for personal loans or mortgage. Prior to proceeding further, let us find out the essential 3 factors that you ought to take into account before settling for any deal in UAE or for that matter any other place. These are as follows-

Rate of interest

As far as interest rates are concerned, you have two options to choose from, namely, fixed interest rate and variable interest rate. While the amount you pay for repayment with fixed interest rate will remain unchanged throughout the tenure of your loan, in case of variable, the amount you pay every month will change with the prevailing rates in the market at any given point of time.

Increasing interest rates

Every mortgage borrower will be affected whenever there is rise in interest rate. This holds true due to the fact that over the years (tenure of the loan) the amount you pay gets magnified with the rising rates.

As of 2016, there was increase in Emirates Interbank Offered Rate or EIBOR. This is basically the interest rate that is being charged by the banks in UAE for transactions taking place between different banks.

The EIBOR rate is usually decided upon by the UAE Central Bank. As such, an increase in EIBOR means that the rise has to be distributed among the borrowers. This applies not just when rates rise but also when rates reduce.

Eligibility criteria

Factors that help you to qualify for mortgage with the best possible rate include your income, duration of employment, nature of the company with which you are employed (listed or not listed with the bank).

These are just few of the factors for being eligible for a mortgage. In fact, even if you want to opt for a personal loan and enjoy the best personal loan rates, these 3 factors will be taken into account while applying for the loan. So, it is not just while applying for mortgage.

Banking sector in United Arab Emirates

The banking sector has seen a rise in the number of foreign banks. There are more than 45 banks that operate in UAE. Majority of the banks can be found in Dubai and Abu Dhabi. In fact, banks in these two places contribute for around 90% of the total assets in the domestic banking scenario.

Banking for expatriate population

Since expatriate does not have guarantee of staying on for a prolonged period of time, any individual opting to open an account in the bank is required to furnish details of the employee and employment status.

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