Dubai mortgages to finance the purchase of Dubai properties
If you are in the market for properties in Dubai you must decide how to pay for your purchase. For most people, this means taking out a loan secured on their Dubai properties. The cost of borrowing in Dubai is getting lower as the market matures and Dubai mortgages are becoming more attractive.
How do Dubai mortgages work?
The loan-to-value (LTV) amount you are able to borrow depends upon the lender. Some banks and other financial institutions will only lend 50% of the value of properties in Dubai whilst others will agree to a loan of around 75%. It is always better to find out how much you can borrow before you start looking at Dubai properties.
Dubai mortgages work on the basis that the repayments do not exceed one-third of your income. UAE-based banks are offering more flexible Dubai mortgage products all the time as they become accustomed to the freehold market for Dubai properties. As a result, the cost of borrowing to buy properties in Dubai is reducing.
Paying off the mortgage on properties in Dubai
The usual repayment period of a Dubai mortgage is 15 years but this is dependent on the lender and sum borrowed. Consequently, there is great disparity between the products offered by different banks for buying Dubai properties. Interest-only and repayment Dubai mortgages are available but in all cases it is better to receive several quotes for mortgages on properties in Dubai.
Fixed-rate and variable Dubai mortgages are also available. The UAE Dirham is linked to the US Dollar although interest rates are considerably higher (6.5% compared to 4.1%)
Disadvantages of using a Dubai mortgage to pay for properties in Dubai
The range of Dubai mortgage products available for buying properties in Dubai is expanding all the time but is still limited compared to the UK. The interest rate in the UK is currently lower than Dubai mortgage rates.
There are also currency issues involved with borrowing money in another currency. Exchange rate fluctuations can impact greatly on the cost of your Dubai property, making it far more expensive than originally planned.
