Home Mortgage in Dubai, The Ultimate Guide!

Home Mortgage in Dubai, The Ultimate Guide!

Thousands of people around the globe dream of buying a property in Dubai. Some looking to take advantage of the tax free capital gains & high rental returns, some seeking for holiday homes and lifestyle investments and others are first home buyers looking for their family dream home.

The Central Bank of United Arab Emirates ( CBUAE ) has introduced new initiatives and regulations to further open up the Dubai properties market to both overseas buyers and expatriate, giving access to more prospects to get into the property ladder.

In this blog i will take you through the new mortgage rules, and try to answer to the most common questions you might have in mind. I hope at the end of the article you will find some added value. Now get your coffee and lets jump into it 🙂

13.6% is the Real Estate sector’s contribution to the Dubai’s GDP!

LTV increase by 5%!

The law defines the eligibility of various categories of borrowers based on a loan to property value ratio. The CBUAE issued a decree in March 2020 which allows banks in the UAE to increase the loan-to-value (LTV) for first time buyers by 5% for both expats and UAE nationals.

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This means that expats are now able to borrow up to 80% of their property purchase price and UAE nationals up to 85%. This is an increase from 75% and 80%, respectively.

For an off-plan property, the maximum is 50% of the value of the property, and that is irrespective of the buyer’s nationality.


How much can you borrow?

As per March 2020 New Rules

UAE NationalsExpatriates
First Property AED 5 million or below85%80%
First Property above AED 5 million75%70%
Second Property + more (irrespective of the price)65%60%
Off Plan Properties (Irrespective of the price)50%50%


Mortgage Types

Fixed rate mortgages

Fixed rate loans generally offered for a limited one to five years, with three years being the most common where the main advantage is certainty.

Once the fixed term ends, the rate will automatically move to a reversion rate, also known as Follow-On rate.

Fixing your loan ensures you are not exposed to interest rate fluctuations and your monthly repayments remain consistent for a set period of time, making it easier to budget.

Variable rate mortgages

Variable rate loans fluctuate based on the Emirates InterBank Offered Rate (EIBOR). With variable interest, your monthly repayment amount may change, which may impact predictability in your monthly expenses.



The interest calculation

Flat interest rate

A Flat rate is a simplified form of interest where the annual interest is set at the beginning based on the principle of the loan.

The flat rate is usually the lowest rate when you’re looking at a loan, however it’s usually misleading. Having a loan where you pay flat rate usually turns out to be more expensive, although the interest rate appears lower. Because the interest doesn’t decrease over time, it becomes more expensive.

Reducing interest rate

A reducing rate of interest is when the interest is recalculated at the beginning of each year based on the current mortgage balance.

A reducing rate as the term suggests, is an interest rate that is calculated at the beginning every year on the outstanding loan amount. Each time you make a repayment on the loan, the interest rate will decrease. Basically, the interest for your next loan payment will be calculated based on the updated unpaid loan amount.


Generally it is better to have a reduced rate, especially if the length of the loan is long as the reduction makes more impact the longer the term.

Reducing rate is also far better if you plan to make additional payments on the mortgage, as these supplementary payments can substantially lower the interest calculated in later years.


Previously, the UAE Central bank imposed a limit on the age of the last repayment: 65 years old for those employed by a company, and 70 for the self-employed.

A new decree issued in October 2019 by CBUAE has removed the Age Cap for both residents and non-residents, irrespective of the nationality. The maximum age restriction can now be set by lending bodies and banks, which creates more opportunities for more mature investors and buyers.




Keep in mind that in the UAE, the life insurance is mandatory to get your mortgage. In most cases the bank lending you the funds for your property purchase will require that you take their in-house life insurance policy in order to get the mortgage. On a AED One million mortgage life insurance can cost around AED 100 per month. The life insurance policy will pay out the home loan in case of the borrower death,god forbid, so that his family can enjoy the property without having to worry about mortgage payments. 

In terms of cost, bear in mind these fees : the bank mortgage arrangement fee, which is a 1% of the loan amount, as well as the valuation fee costing typically AED 2,500 to AED 3,500 ,and the Dubai Land Department Mortgage registration fee, a 0.25% of the loan amount.

There is clearly a huge appetite for lending with all the banks in the UAE in recent months, with fixed rates from 2.9% with 3 years. That’s 25% less on what they were a year ago at 3.99%. Another important note is that now Expat Borrowers can get their property transfer fees financed as well for up to 80% of the DLD registration fee + 80% of the agent’s commission, Local nationals can get up to 85% of the DLD registration fee + 85% of the agent’s commission ( applicable for properties below AED 5 million and first time buyers Only ).

Understanding the risks between fixed and variable rates and the different revision rates available in the market is important to every borrower. You can either talk to every bank in the UAE or you can reach out to me to assist you the property requirements and connect you with an independent mortgage professional.

Thank you for taking the time to read my blog post, i hope that you have now a clear overview about mortgages in Dubai.

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Sofiene Haddad

Senior Sales Manager

For all your real estate related matters, please reach out to me !

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