Dubai Mortgages- What is the Maximum Amount You Can Borrow?

Are you looking to purchase property in Dubai and wondering how much you can borrow through a mortgage? We sat down with one of Mortgage Finder’s most experienced mortgage consultants, Mr. Brendan Kennelly, to help you get a full picture of your borrowing capacity when applying for a mortgage in Dubai. In today’s article, Mr. Kennelly will be discussing the different factors that affect your mortgage borrowing capacity in the UAE.

What are the Factors Affecting How Much Can I Borrow For a Mortgage In Dubai? 

The maximum mortgage amount that you can borrow in Dubai will be determined by two factors. 

1. The maximum mortgage amount you can get in Dubai is 7 times your yearly income (or 84 months). 

2. The total liability repayments in Dubai cannot be more than 50% of the total salary. 

How can I calculate how much I can borrow accurately? 

The easiest way to calculate your mortgage affordability is to use the affordability calculator. This calculator takes your monthly income into account, your debts, and the amount you can pay in advance to help you decide which properties are within your budget.

3. What Is the Loan-to-Value Ratio in Mortgages?

Loan-to-Value (LTV) is the ratio between the amount of money you can borrow and the value of the home you want to purchase. It is calculated as 100 times the loan amount/property value. In the UAE, the maximum loan-to-value ratio (LTV) for Expats is 80%, and for Emiratis, it is 85%. However, if the property is still under construction, the LTV may be as low as 50%, depending on the construction stage and the developer’s reputation.

4% Fees 2% Agent Fees Property Valuation Fees Insurance Fees These fees can add up quickly, but some lenders allow you to include them in your mortgage. This allows you to spread out payments over the term of your loan. You may be able to afford more expensive properties in the UAE if you include these additional costs in your mortgage.

What is a good ratio between salary and monthly mortgage payment? 

The optimal ratio between salary and total monthly liabilities is 50%. Your total monthly liabilities could include any existing mortgage you have, credit card payments, personal loans, car loans, etc. Mortgage payments should be kept within this range so that you don’t become financially burdened. It is important to find a balance between income and housing costs so that you can have enough disposable income for saving and other essential expenses. Staying within this recommended range will help you maintain financial stability. You will be able to comfortably pay your mortgage obligations while still having enough disposable income. The 50% ratio is a regulation of the UAE’s Central Bank, but it will depend on your situation.

What Is The Maximum Loan Term In The UAE? 

The loan term is the amount of time it takes to pay back the loan. The maximum loan term in the UAE is 25 years. The maximum loan term for a salaried employee can be up to 65 years, or 70 years for a self-employed employee. If the employer does not have a fixed retirement age, many banks will offer a term of up to 70 years for the salaried employee. A longer loan term can help reduce your monthly mortgage payments. However, it also means that you will have to pay higher total interest payments throughout the loan term. It is important to think about your financial position and your long-term goals when choosing the best loan term for you.

What is the relationship between the property valuation and the loan amount? 

Property valuation is the estimate of the value of a property. It is usually done by a qualified valuation expert. It can be more or less than the purchase price of the property. In healthy markets, property valuation usually matches the purchase price. The loan amount will be based on either the purchase price or property valuation. 

What is the stress test in mortgages?

A stress test is a financial assessment that lenders carry out to ensure you can make your mortgage payments even when faced with difficult circumstances. It looks at your income, expenses, and debts to make sure you are prepared for unexpected or increased interest rates.

The stress test is designed to provide you with an idea of how much you can afford to pay on your mortgage at a stressed rate. The goal is for the mortgage payment to be within your monthly income of 50%. If it’s not, you’ll have two choices: You can reduce your credit limits You can clear existing debts such as car loans or personal loans if it’s within your budget. The stress test provides you with a glimpse of different scenarios to help you make sure you can afford your mortgage no matter what. It’s part of good lending practices and helps you maintain financial stability and peace of mind.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.