Mortgage in UAE: 3 Most Important Factors to Consider

Needless to say, the UAE has become one of the major countries that people trust with their hard-earned money in forms of investments. The country has become a hub for investments in many sectors with real estate being the prominent one. With real opportunities to yield great returns, people from across the globe prefer the UAE for investment purposes.

This is not the only reason why people are relocating to the UAE from different parts of the world. The exceptional living conditions and facilities available to the residents make for other prominent reasons why a lot of people want to move here. If you are also among them and are looking for a residential property for sale in the UAE, you have landed at the right place. Here, we have discussed one of the most important factors that one has to consider when buying property i.e. applying for a mortgage.

Managing funds, as we all know, is an integral part of buying a home. Whether it’s a villa, apartment or a standalone housing unit, you need to arrange funds to be able to buy it. For this, applying for a mortgage is a common option in the UAE people opt for. If you plan to apply for the same, have a look at three of the important things you need to consider:

The Type of Property

Firstly, you need to decide on the type of property you are interested in. The UAE has different types of residential properties available for those who are interested. Whether you want to buy a villa, an apartment or a single unit, you need to decide before applying for a mortgage as it can impact the process to apply for the same.

Understand Different Types of Mortgage Payments

Before applying for a mortgage, it is important to get yourself accustomed to different types of mortgage payment options. This step is important as having an understanding of these options will enable you to select the one that is in the best of your interests.

Some of the common types of mortgage payment options you need to know about include:

Interest-Only Repayments

This type of payment option is suitable for off-plan properties. For the buyers, this option is convenient as they only have to pay interest on the loan they have taken, not the capital amount. This mortgage payment option is offered for a period of 5 years.

Capital & Interest Repayments

One of the commonly used options, capital & interest repayment type allows the buyer to repay in the form of EMI on a regular basis. The total amount they have to pay both the capital and interest charged. The time frame of this mode of payment is decided mutually among the mortgagor and mortgagee. Generally, the duration for which the contract lasts for varies depending on different factors.

Down Payment

For a property finder UAE, another mortgage payment option is to make a deposit of down payment when the mortgage is applied. The amount that is deposited as down payment depends on different factors including the bank, type of loan, type of property, etc. Generally, expats are required to pay somewhere between 25% to 25% of the value of the property. However, in the case of off-plan property, it can be increased to 50%. 

Mortgage Life Insurance

It is a type in which the life insurance companies repay the mortgage amount in case the demise of the borrower. Mortgage life insurance is particularly suitable for those who have their dependents residing in the said property.

Fixed-Rate Mortgage Payments

Fixed-rate mortgage payments, as suggested by the name, have a fixed interest rate that stays the same through the duration of the contract. This rate of interest is mutually decided between both parties at the time they sign the contract.

Variable Interest Mortgage Payments

As opposed to the fixed rate, the rate of interest remains variable in this type of payment option. Depending on the market value of the property, the interest rate is levied on the property.

Compare Mortgage Rates

When applying for a mortgage, don’t just settle for the first option you have explored. Take your time and get quotes from different banks. Compare their rates and other facilities if they offer. After a thorough evaluation, consideration, and deliberation, make a well-informed decision that can prove to be profitable for you in the long run.