Comparison of Home Loans offered by the major banks in the UAE
Minimum Salary requirement
|Interest rate||Down payment||Maximum loan amount||Prepayment charges||Loan tenure||Bank charges||Specifications/benefits|
|ADIB Home loan||AED 10,000||
Reducing – 2.99% per annum
Flat – 1.65% per annum
|20%||AED 20,000,000||1%||Upto 25 years||0%||
|Arab Bank Home loan||AED 15,000||
Reducing – 3.99% per annum
Flat – 2.2% per annum
|25%||AED 5,500,000||2%||Upto 25 years||1%||
|United Arab Bank Home loan||AED 15,000||
Reducing – 3.29% per annum
Flat – 1.79% per annum
|20%||AED 10,000,000||1%||Upto 25 years||0.8%||
|Emirates NBD Home loan||AED 10,000||
Reducing – 3.99% per annum
Flat – 2.2% per annum
|20%||AED 5,000,000||1%||Upto 25 years||1%||
Reducing – 2.99% per annum
Flat – 1.65% per annum
|20%||AED 13,000,000||1%||Upto 25 years||1%||
|First Gulf Bank Mortgage||AED 15,000||
Reducing – 2.99% per annum
Flat – 1.65% per annum
|20%||AED 10,000,000||1%||Upto 15 years||1%||Both UAE nationals and expats can avail this mortgage|
What is a Home Loan?
Home loan is a form of financial assistance offered to individuals to help them buy a house of their own. It is a kind of debt instrument, and also known as mortgage loan. You need to pay off your home loan over a certain period of years as agreed upon with your concerned bank. After repaying the loan, the borrower finally owns the property in his/her name. In home loans, banks use the borrower's home for security, and if the borrower stops paying the loan, banks can foreclose the loan and claim the mortgaged property in their name.
Types of Housing Loans or Mortgages in UAE
Home loans are basically of two types based on interest rates charged. They are -
- Fixed-rate home loans
- Floating/adjustable rate home loans.
With fixed rate home loans, the interest payable on the principal amount remains fixed for the whole tenure. With adjustable rate home loans, interest paid on the outstanding can change based on a specific benchmark and ARM margin. The initial interest rate is normally fixed for a period of time after which it is reorganized recurrently, often every month. Adjustable rates are also known variable rates.
Advantages of availing a Home Finance in the UAE
A home loan can help you fulfil your dream of buying your own home. Having a house of one’s own is the highest priority for many.
Now a days, the demand for home loans goes up with many people trying to buy their own houses instead of paying rent for a long periods. Besides, buying a house is a good investment option, given the returns offered by it in future.
Following are some of the benefits you can avail by opting for a home loan in UAE:
- It provides you a sense of accomplishment and security.
- You can expect capital appreciation gains.
- Get free valuation and insurance of the property.
- Get free credit cards with lifetime validity.
- Avail financing up to 80% on your property.
Features of Home Loans, Mortgages or Housing Finance in UAE
Home loans are very much in demand UAE and banks in UAE offer great deals to help you buy your dream home. With low interest rates, fastest processing, no hidden charges and exclusive benefits, taking a home loan in UAE is very easy. Mentioned below are some of the features of home loans in UAE.
- Competitive rates of interest.
- Low processing fee.
- Special schemes for expats and nationals.
- You can apply for it individually or add co-applicants.
- Interest rate is as low as 2.99%. However, it varies depending on banks.
- Enjoy long repayment period up to 25 years.
- Both UAE and Non-UAE residents can avail home loan.
- Easy processing & documentation.
- Flexible repayment options are available.
- Salary transfer is not mandatory.
- Finance available for residential and commercial properties
- Get complete home finance solutions for UAE Nationals.
- Get home loans at fixed and floating interest rates.
Eligibility Criteria for a Home Loan in the UAE
- Both salaried and self-employed individuals can apply for home loans in UAE.
- Both UAE nationals and expats are eligible for home loan.
- A minimum salary of AED 10,000
Purchasing a home is a huge commitment, involving a great deal of money. With banks and financial institutions cropping up across UAE, buying a home has become easier, thanks to home loans and mortgages, but availing such facilities without thinking twice could come back and haunt you. Here are certain key questions you can ask yourself to ensure that your dream home doesn’t turn into a financial nightmare.
- Did I do my homework? – With such a wide array of options before us, it is easy to get swayed and opt for something which does not serve our purpose. It is for this reason that doing research before walking into a bank can help you save time and money.
- Fixed or variable interest rate? – Choosing the right interest rate option can help you plan your finances accordingly, with the fixed rate ensuring that you pay a fixed amount to repay your loan whereas a variable rate can have you paying interest based on market conditions.
- How much money do I need? – Not knowing how much money is needed to buy a house could see you falling short of or overshooting your requirements, which would mean that plenty of compromises need to be made. Doing a background check to determine the market rates could help you get the right figure.
- Do I have means to repay the amount? – Availing a loan is often the easy part, repaying it however, is hard and tedious. Failing to repay the loan on time could see you lose your home, which is why it is crucial to ensure your EMIs are within your budget.
- Islamic or conventional finance? – Each finance method has advantages and one should see which one is more beneficial. Islamic finance involves the bank purchasing a property on behalf of a buyer and selling it at a certain cost, removing the hassles of interest.
- How much down payment is needed? – Down payment is a mandatory requirement when it comes to availing loans, with the amount varying according to multiple criteria. Lower down payments could help you get more money immediately, helping you get down to the crucial task of constructing a house.
- Should I choose a reducing balance or flat rate? – This mathematical calculation can get confusing. While the flat rate implies that you pay a certain amount on the basis of your initial principal amount. In the reducing balance method, the interest is calculated on your balance due, with the amount changing after each payment.
- Should I opt for prepayment? – It is possible to come across sufficient funds to repay the loan before the term expires. One should however keep in mind that most banks charge a prepayment charge for early closure of loan. While an early repayment offers peace of mind, it also means that your wallet gets lighter on account of the fine.
The decision to buy a house is a huge one and asking a few basic questions to yourself can help you find the right answer.
There is no other feeling like being the master of your home, owning something you know will protect and safeguard your family and you. While there are a few things which surpass the joy of owning a home, getting a great deal on your home loan could sweeten things for you. Here are some of the best home loan deals you can get today.
- HSBC New Home Loan – This home loan from HSBC comes with a low interest of 1.8% per annum and loan amounts up to AED 20,000,000/-, making it a great way to save money compared to others.
- ADCB Mortgage – This ADCB Mortgage comes at an interest of 2.2% per annum and individuals earn 200 touch points per 1,000 AED.
- ADIB Home Finance – This ADIB Home Finance comes at a low interest of 1.65% per annum and individuals also get free home insurance till the loan is cleared.
Note: Individuals should check the validity of these deals with their respective banks. These offers are subject to change without prior intimation.
Now selecting the best Home Loan in UAE is made easy by BankBazaar, a leading online financial services provider dedicated to helping users choose the best financial products. Mentioned below are some of the benefits of BankBazaar:
- You can compare between a numbers of home loan schemes offered by various banks and find the lowest rates in the market. Interest rates are constantly monitored at BankBazaar to keep you updated.
- You can check your eligibility for home loan online by using BankBazaar’s unique home loan eligibility calculator.
- Know your EMIs instantly by using BankBazaar’s unique Home Loan EMI Calculator. Also, it provides you loan amortization table.
- Get end to end service assistant from BankBazaar’s customer friendly helpdesk.
- When can I apply for a home loan?
- How do I apply for a home loan?
- Do I get tax benefits by taking out a home loan?
- Can I avail a home loan and use the money to make improvements to my existing home?
- Will the rates vary if I’m an expatriate?
- What are fixed and variable rates in terms of home loans?
- What is a down payment on a home loan?
- Does the down payment amount vary for different individuals?
- Is it compulsory to take an insurance policy on my home?
- What is the difference between flat and reducing interest rates?
Customers can submit their applications for home loans after they have made a decision to construct or buy a property, even if the construction has not begun or the property is not selected.
Customers can apply for a home loan by visiting any branch of the bank and picking up an application form, or downloading the form from the bank’s website and submitting the same in addition to all the required documents as well as the processing fee. Customers also have the option to apply for home loans online.
Yes, customers are eligible for tax benefits so far as the principal payment and interest components are concerned. However, benefits vary from year to year so you will have to consult a financial advisor to get a better understanding of tax benefits.
Yes, you can avail a home loan and use it to either purchase a home, construct a home, make repairs or improvements to your home and home extensions.
Yes, the rate of interest on rate of interest on home loans charged by each bank varies for residents and expatriates. Most banks have special home loan schemes targeted at expatriates. You must consider those loans as they come with terms and conditions that are easier for expatriates to meet.
A fixed rate implies that a borrower will have to pay the same interest over a period of years. Variable rates are dependent on the market, with fluctuations observed, meaning that a borrower might have to pay different amounts depending on market conditions.
Most banks do a survey of the property before providing a home loan. Post this survey, banks will offer loans to the tune of 80-85% of the total property value, with the borrower expected to pay the rest in order to purchase it.
Yes, generally the amount a borrower pays as down payment varies, with different amounts for locals and expats, with the credentials of a borrower determining the amount to an extent.
Yes, it is mandatory to have a property insurance if you wish to avail a loan.
Flat interest rates refer to the process where the interest is computed on the full principal. A reducing interest rate involves interest computation on the amount which is left to be paid, i.e. outstanding amount for a particular period.
The main factor while taking a home loan however is the interest rate. Home loans are easily available from various banks across the UAE and the interest rate that is applicable on these loans depends on the bank that offers that loan. It is the rate of interest on the Home Loan that affects the EMI and hence your monthly budget throughout the tenure of the loan.
Planning to buy a property for the first time in your life and that too on mortgage? It is a huge expense and a massive commitment to get involved with. Hence there are certain things you will need to know about it before you can proceed.
Ever felt like changing your lender? There are lots of things that make refinancing a mortgage a good idea and the chief among them is that if can help ease the pressure of monthly payments. You can also walk away with lots of benefits, depending on the bank.
Did you know that you can avail finance by tapping into the positive equity of your property? Instead of letting your property to sit idle, you may use it to avail finances. Many banks provide cash advances against properties for a lower rate of interest. Using properties as a collateral will help get cash advances of a higher amount at a very low rate.
Buy-to-let mortgages are best suited for the people who want to make an investment in the property with just the intention of letting out the property for rent. But since their purpose differs much from the regular mortgages, so does their other attributes. Hence it requires a well informed decision before opting for it.
Home Equity Loans provide the facility for homeowners to borrow funds by putting up the equity in their homes as leverage. Home Equity Loans or Second Mortgages are among the easiest sources of cash a customer could wish for. And these being tax deductible, offer an additional benefit.
Home Refinance Loans provide an option to the customers to opt for an additional finance on the existing property so as to get a better term and rate of interest than offered by their current mortgage. The second mortgage can be taken out once the first has been repaid.
Subprime Mortgages provides mortgages for the acquisition of residential real estate, sanctioned to customers with a bad credit history. Hence the risk of default on these loans is significantly higher and so are the fees to make up for the extra risk.
Reverse Mortgages are a special kind of mortgages targeted only at the customers who have crossed the age of 62 years. The banks or the lenders provide the money against the equity in the existing property and also do provide for the payments to be made either monthly or occasionally in lump sums.
Interest only Mortgage in the UAE provide the facility to the customer to pay off the interest on the mortgage before the principal amount. Interest only mortgages come with a fixed term and have so many benefits apart from low initial payments and are suggested for the customers who intend to sell the property after the end of the mortgage.
Fixed Rate Mortgages offer finance at fixed rates throughout the loan tenor and hence the monthly payments due on fixed-rate mortgages also remain the same. They are the exact opposite of adjustable rate mortgages in which the monthly payments may be low during the initial stages of the mortgage but could potentially increase to almost double the initial interest rates which will increase the monthly payments.
Relevant Blog Posts on Home Loan
Check the Cost of Your Home Loan in UAE
Are you taking a home loan in UAE? If yes, then you must be prepared for the costs associated with taking a home loan. The fees associated with a home purchase includes closing costs, loan discount points and prepaid items. Read More…
News about Home Loan in UAE
Dubai Mortgage deals doubled in the past 7 years
The Dubai real estate market double in the past 7 years. But, the surge in the home loans has lowered the sale transactions. The property transactions have fallen by 3%. The cash transactions take 15 – 30 days, but the mortgage transactions are taking close to 30 – 60 days. Downtown and Palm Jumeirah reported the highest amount of mortgages. Arabian Ranches have the highest mortgage to sales ratio. The homeowners are now getting comfortable with mortgages. Government developers account to 60% of mortgage activity. Despite the curb on the mortgages by the Central Bank, there has been increasing demand for mortgages.
31st January 2017
Investors choose mortgage to expand their portfolios
A huge number of investors are taking mortgage to expand their portfolios. There has been a 119.5% increase in number of people looking for mortgage since last year. This shows increase in UAE real estate market and positive trend. The criteria for the mortgage for first property is based on the risk appetite and the customer’s financial situation. Customers compare their mortgage and the payments against the current rent to evaluate their affordability. The investors are also asked to base their decision on the stress testing. Most people prefer to take a mortgage as the rental earning cover the loan instalments.
11th January 2017
More Dubai residents are taking home loan
There has been 119.5% increase in the number of people searching for mortgages. The end users in Dubai are looking to take out a mortgage to buy property. According to the data provided by Dubai Land Department show the unit transaction sales for November were worth AED850.21 million, out of which the mortgage transactions were AED462.81 million. Completed projects get a higher loan to value of 75% than an off-plan mortgage. The property sales for AED5 million and above is less because of the higher deposit requirement. Most mortgage consultancies are seeing a good demand for townhouses and apartments which are priced below AED1 million.
30th November 2016
Mortgages enquires doubled during the third quarter in the UAE
The UAE residents searching for mortgages have doubled in the third quarter of 2016 when compared to the same period in 2015. According to the survey conducted by Core Savills, over half of Dubai’s tenants are looking to buy their own place of residence. Out of this over 62% were leaning towards buying to own rather than buying to let. The survey mentioned that the buyers are facing difficulties in securing finance on homes. Most people are trying to take advantage of the low prices of the property and are eager to take on a finance so that they don’t miss out on a great deal.
17th October 2016
UAE residents looking for home loans have doubled
Dubai has been a host to new housing developments and property giants are showing off plenty projects which will be ready by 2020. UAE residents are now more interested in buying a property and there is a 119% increase in people searching for mortgages. People are looking at taking advantage of the lower property prices and they are eager to take finances to make sure that they are not missing out on a good deal. Half of Dubai’s tenants are now on a lookout to buy a place of their own out of which 62% are buying to own and not buying to let out. More than half of those looking for a place want to make a purchase in the next 1 year.
13th October 2016
UAE’s property premiums rose by 10.4% in 2015
With the resurgence of the UAE’s construction sector, the premiums written in property and liability insurance increased to AED27.5 billion in 2015. A 10.4% increase was recorded by the Insurance Authority in the Annual Report on the Insurance Sector in the UAE for last year. Economic diversification efforts have contributed to the UAE’s position of that of a stable investment destination. A lot of foreign investments have been coming in to the UAE. Qatar was listed as the least corrupt country in the Arab earlier this year.
12th October 2016
Delays of up to 5 Years Cause Emirati Home Loans to Reduce Wait Time
Emiratis now have reason to sigh a breath of relief with a reduction in wait time to receive government housing or home loans. Khalifa Al Hemeiri, the executive director the Abu Dhabi Housing Authority has said that the authority plans on introducing a new time frame for receiving the home loans after receiving a slew of requests to speed up the process.
Wait times incurred by Emiratis have gone up as high as six years in some cases. Even those who are eligible to avail government housing loans have had to wait long period of times. The new time frame will help many families as they are currently residing in rented residences that put a financial strain on the family.
10th May 2016
Emirati homes get new designs from Abu Dhabi Housing Authority
Emirati housing loan recipients can now opt from 58 new housing designs that have been released by the Abu Dhabi Housing Authority. In order to simplify the process of buying and building homes for Emiratis, the designs were released as part of the Bayti (my home) initiative.
Director General of the Authority, Saif Bader Al Qubaisi, stated that the initiative will support building residential communities based on the highest standards of quality and efficiency, in turn guaranteeing the provision of security and comfort to the citizens now and in future.
Mahra Al Qassimi, Bayti project manager at the authority, also stated that Emiratis can choose the land and size from the catalogue and then build on that according to their own choices and designs. The 58 designs, in different styles, range from modern, Andalusian, Islamic and heritage. The homes will be available in Abu Dhabi, Al Ain and the Western Region, and can be built within two years, while the average expected cost for each house is Dh 2 million.
13th January 2016
Mortgages rise in the UAE
UAE homeowners are feeling the pinch due to the mortgage rise as a result of Fed rate increasing. The variable rates are beginning to increase since the beginning of January, 2016. The repayments have been raided and are interest rates will go up soon for the first time in 5 years. This rise in the mortgage rate will bother those who have just about sufficient income to pay the mortgage and it won’t be affecting the rich. The rate rise will effect heavily on those who have taken variable mortgage. The pressure to increase the rates are because of tightening of liquidity in the banking sector. The rise will come as a blow to the property sector which is hit due to the strong US Dollar.
08th January 2016
NRIs save up to 40% of their income to purchase property back home
A recent study has revealed that around 43% of NRIs working in the UAE save up to 40% of their disposable income in order to make a solid investment in real estate in India.
The survey was conducted with over 8,630 participants in the UAE, just ahead of the Indian Property Expo that is scheduled to be held between the 1st and 3rd of December, 2015, at the World Trade Centre in Dubai.
It’s no secret that jobs pay up to 200% - 300% more in the UAE for similar services rendered, although the process of getting the job is a hassle, and the cost of living is way higher than it is in India (on an average between all metro cities).
Even so, it is very easy for NRIs working in the UAE to save money, just by cutting back on a few luxuries and making a conscious effort to save. This is evidenced by the 20% of survey participants who claimed to be first time real estate buyers, and the 55% who aimed to purchase property for personal use.
The savings seem to be very effective, as 70% of those polled plan to purchase property within 6 months. The volume of savings is also quite high, as 45% of those polled said they wished to purchase properties valued between Rs. 500,000 and Rs. 5,000,000.
17th November 2015