How to Get a Pre-Approved Mortgage in Dubai

A person signing a Pre-Approved Mortgage document.

Getting a mortgage pre-approval offers several advantages, so it should ideally be one of the first steps you’ll take when buying a home in Dubai.A mortgage pre-approval is a document stating that a lender has given you conditional approval for a home loan.This letter lets property sellers know you will probably be approved for a certain amount of financing that you will use for buying your new home.

A pre-approved mortgage gives you a clear idea about the budget you have to prepare for your new home. Because of this, you can avoid setting your sights on properties that could be beyond your reach.A pre-approved home loan can also help you narrow down your options for your choice of neighbourhood. Since property rates differ by area, you can reduce the time you need to find the right location by keeping the pre-approved amount in mind as you conduct your search.

Lastly, a mortgage pre-approval can streamline the entire home buying process. With your funds already in place, you will have an easier time managing all succeeding financial requirements.As such, while studying the different types of mortgage loans in Dubai, take the time to understand how you can get a mortgage pre-approval to streamline the whole home-buying process.

Obtaining a Mortgage Pre-Approval in Dubai

If you are interested in applying for a pre-approved home loan in Dubai before purchasing a property, you can increase your chances of getting one by following these tips:

1. Prepare for the initial costs.

Applying for a pre-approved mortgage and buying a new home in Dubai comes with some expenses that you have to pay upfront.Applicants are often asked to pay at least 25% of the total purchase if the property’s sale value is under AED 5 million. This amount will be deposited as a down payment.Additionally, the Dubai Land Department charges a 4% transfer fee and .25% registration fee of the total mortgage.

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You also have to pay a valuation fee, which is around AED 3,000.Your loan provider, whether it is a bank or other institution, will also likely charge a 1% loan establishment fee.Some loan providers may defer this payment. You can ask the sales representative if they have this arrangement. If not, prepare to pay for this fee upfront as well.Lastly, you may also have to pay some initial fees upfront if you work with a real estate agent.

2. Request quotes from different mortgage lenders.

Lenders have different guidelines and interest rates, which will affect your monthly payments. Although you want your application to be approved, you don’t want to be stuck paying a loan for years that might drain your finances. This can happen if you go with the first pre-approval you get.

As such, try to obtain several quotations from multiple lenders before you start house hunting. Go over the details of their quotes carefully to find out which one suits your budget and payment capability.Pay attention to the interest rate, payment terms, and other add-ons that will increase the upfront and monthly fees. Don’t forget to read the fine print to avoid being surprised by any unexpected stipulations.

Make sure you compare all quotes to find the best one that you can live and work with comfortably.While comparing quotes, you will do well to select a loan repayment duration that you are comfortable with.The maximum loan duration allowed in the United Arab Emirates is 25 years for salaried individuals up to the age of 65 and self-employed individuals up to 75 years of age.

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Although you may be paying a lower monthly fee if you choose a longer term, the total interest you will end up paying will be higher.It is best you study all offered terms and select one that will allow you to maximise your borrowing capacity. If you choose the one that comes with the lowest monthly rates, you can always make additional payments whenever you can afford to do so.

3. Check your financial health.

Banks, lending institutions, and mortgage brokers look into the credit history of all applicants. Additionally, they will review their financial health and outstanding debts.Because of this, be prepared for a credit check.

Lenders also usually approve loans to applicants who have a high monthly earning. As such, they will check your proof of salary or source of income.They will also require your latest bank statements to get the assurance that you have some funds ready to finance your purchase.

4. Prepare all requirements.

Aside from your proof of income and financial documents, you will be asked by the lender to submit other requirements in support of your application.

These include a copy of your passport and proof of your residence in Dubai and current address if you are presently not living in the UAE.You will also be asked for a copy of your Emirates ID.

Obtaining mortgage pre-approval before doing any serious property hunting can save you a lot of trouble from the start and in the long run.As such, try to get assurance on your home loan before you start checking available listings.

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