4 Factors to consider when choosing a mortgage loan in UAE

The home loans in Dubai are offered in the ratio of 6:10 in the range of 3% to 4% at a reducing rate, the remaining 10% of the loans are provided at a price lower than the interest rates.

Purchasing a home is considered to be the most significant investment in your life, and you are going to look for a long-term commitment if you have decided the finance with a mortgage purchase.

Being the residents of UAE, you need to look for the best deals in the case of a purchase, apart from that you should shop for different mortgages and choose the best one before making them yours.

Factors to Considered before applying for a Mortgage Loan in UAE

There are several factors to consider from upfront cost to the mortgage duration, interest rates, etc. Today we will see come of the essential characteristics of every UAE residents should consider before choosing a Mortgage.

Interest Rates

Fixed and variable are namely two different rates offered by UAE bank on the mortgages, Variable rates are something that gets changes as per the market value, and the fixed rate is something that is set approximately for few years.

The financial calculation for this interest rates is done in two different ways, the flat rate and reducing balance method. The flat rate gets a price from your principal amount for a particular term of duration, and the reducing balance method has an estimate based on your outstanding balance.

Related: Best Mortgage Rates in UAE

Rising Interest Rates:

A smaller change can bring a significant change for the mortgage borrowers, this is due to the high loan amount, and long loan tenures bring substantial effect on the increased interest rates. The Mortgage owners have seen a vast increase in EIBOR , and therefore it’s essential to check for the price they are paying for their mortgage loans.

What is EIBOR?

Emirates Interbank Offered Rate (EIBOR) is one of the interest rates that is charged by the Dubai banks for interbank transactions. To explain more shortly, one bank borrows the money from the second bank in the case of money requirements and the second bank will provide the money to them with EIBOR and UAE Central Bank is the one who declared the value of the interest rate.

The bank will increase the interest rate if the EIBOR increases and similarly there will be a decrease in the bank interest rates when the EIBOR goes down.

Eligibility Criteria:

Eligibility depends on various factors namely minimum service length, minimal salary requirement and much more. According to research people who get a salary of Dh20,000 monthly in Dubai has the right to access 84% of the variable mortgages loan available.

Initial Cost:

According to the rules of UAE Central Bank, people should pay 25% of the properties (minimum deposit) that are sold less than the value of Dh 50000000, considering Dubai you will be asked to pay 4% transfer feed, 0.25% mortgage registration fee added to the down payment.

The policy varies based on the banks, and therefore one should be careful before opting for the individual mortgages in UAE to choose the best home loan for you.

Compare And Apply for Mortgages in UAE