Securing financing for your dream home can seem like a daunting task. However, with the right preparation and process, buying property with a mortgage in Dubai is very achievable. The first major step is obtaining a mortgage pre-approval.
A mortgage pre-approval allows potential homebuyers to receive a preliminary decision from a lender on how much they may be willing to lend. It provides prospective homebuyers with confidence when making an offer, knowing their financing is in place.
Here’s everything you need to know about the pre-approval process to make your home purchase as seamless as possible.
What is a mortgage pre-approval?
A mortgage pre-approval is an evaluation of a buyer’s financial profile to determine their eligibility for a house loan. It indicates the maximum borrowing amount a lender is likely to approve.
While not legally binding, it gives buyers assured financing as they home-shop. It’s ideal to obtain a pre-approval before physically viewing properties or submitting purchase agreements.
Who is eligible for a mortgage?
Mortgage eligibility in Dubai opens doors for both Emiratis and expat residents. The primary requirements assess proof of stable income and good credit.
For salaried buyers, lenders consider factors like employment tenure, salary amounts deposited regularly, and whether the employer is on their approved list. Self-employed applicants need audited accounts showcasing two years of steady income.
Applicants must be at least 21 years old. While age limits have been relaxed, some banks still adhere to caps for retirement ages ranging from 65 to 70 years old depending on residency status. The age limit for the last repayment of a mortgage for UAE Nationals is 70, 65 for expats (but exceptions apply for self-employed individuals), and 65 for non-residents.
In addition, maintaining a credit score above 620 greatly enhances the chances of approval.
Required documents to apply for a mortgage pre-approval
Salaried applicants require salary certificates, six months of bank statements and payslips, credit report consent, and liability disclosures. They must also have a valid visa, passport and Emirates ID copy.
Self-employed individuals must provide trade licenses, Memorandum of Association (MoA) and incorporation paperwork, two years of audited financials, credit reports, and liability details. Additional requested paperwork varies by lender, but generally, self-employed individuals must disclose all liabilities including personal loans, car loans, and credit cards.
Applying for a mortgage pre-approval
Interested buyers can initiate the process by contacting a local bank registered with the Dubai Land Department (DLD) or using a licensed mortgage broker. Brokers simplify navigating options by finding suitable lenders.
They can also advise on clauses like adding property valuations to purchase contracts for deposit protection if financing falls through. Maintaining a pristine credit report further improves the application’s speed and likelihood of approval.
A strong credit score is vital for mortgage pre-approval in Dubai. UAE lenders generally require a minimum of 620-740. There are several ways potential buyers can boost their scores ahead of applying.
Pay all bills like loans, cards, and utilities on time to demonstrate responsible financial behaviour. Clear existing debts to lower utilisation rates. Do not max out available credit to maintain higher available credit balances over time.
Scores below 620 may still get pre-approved but likely at higher interest rates which is why it is crucial to maintain good fiscal habits for the best loan terms possible.
While awaiting evaluation, avoid signing purchase contracts as deposits could become non-refundable if financing falls through. Give deposits only once confident of approval success due to the legal processes involved.
Consider adding valuation clauses to sales agreements that stipulate deposit returns if appraisals fall short of bank minimums for loans. Ensure properties meet lender guidelines before contracts to safeguard funds.
Once complete, applications are submitted, and a decision arrives within 3 to 5 days outlining the maximum approved loan amount based on assessments. With approval letters in hand, you can confidently make offers, submit mortgages, and progress closer to buying your dream home in Dubai.
Follow us on
