Home Loan Eligibility in UAE

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Home loans are quite popular in the UAE, with a significant portion of the population opting to buy a house using these loans to arrange the required finances. However, to get the best plan for yourself in terms of the loan amount as well as the applicable conditions and fees, it is highly recommended to compare various providers and plans and read the fine print of the loans.

As home loans and mortgages can often prove complex, there are some basic aspects that you must be aware of should know whether you are a UAE national or an ex-pat. Moreover, different requirements are there for applicants based on their nationality, income, credit score, and more.

UAE Mortgage Loan Eligibility Major Criteria

With various banks and financial institutions operating in the UAE, users have a variety of home loans with different rates, features, and requirements to choose from. 

While the requirements differ for each home loan provider, the general mortgage loan eligibility criteria applying in the UAE are:

  • The applicant must be a UAE national, resident, or expatriate
  • Individuals applying for the loan must be at least 21 years old (with the maximum limit generally being 65-70 years
  • Ex-pat applicants are generally required to have a minimum monthly salary starts of 15,000 AED, while the requirement for the same is AED usually 10,000 for UAE nationals

Mortgages in the UAE are also available to non-residents. However, the options available to them are severely limited as only a few institutions offer loans to non-residents. 

Similarly, even self-employed individuals can apply for home loans in UAE. However, the providers generally require them to have completed at least two years in business. 

Factors Affecting Home Loan Eligibility in UAE

When looking for a mortgage, it can feel overwhelming to decide where to start, what to look for, and ultimately which lender and mortgage to choose. While first-time home buyers are at a disadvantage due to their inexperience, even experienced buyers may often feel this way, especially if they are new to the UAE. 

However, to avoid all such confusion, you can simply consider the following mortgage loan eligibility general criteria when searching for a home loan in UAE:

  1. Age Range - Home loan eligibility and loan age tend to have an inverse relationship. As a general rule, the younger you are, the more likely you are to smoothly navigate the loan-approval process. The minimum age requirement for a home loan is usually 21 years for most banks, while the limit on the other side is generally 65 years for ex-pats and 70 for UAE nationals.  
  2. Status of Employment - As mentioned earlier, each loan provider has a different set of income requirements for their home loan plans. If salaried individuals go for a higher loan amount, they can expect higher monthly salary requirements. However, self-employed individuals who wish to qualify for a mortgage in the UAE to buy a home generally need to present more proof related to their income. As the volatility of income can often be higher for self-employed individuals, it is likely that some lenders will be concerned about whether such an applicant would be able to repay the loan amount on time. Even so, there is ample opportunity for self-employed individuals to qualify for mortgages in the UAE. It is essential to remember that lenders ultimately look at your income stability, financial strength, as well as the ability of your business to generate sufficient income in the future when they are assessing your application.
  3. Credit Score - A credit score is among the key mortgage loan eligibility criteria for home loans in the UAE. It is simply a three-digit number between 300 and 900 which shows your financial track record and your management of dues, loans, and others. Individuals with low credit scores are more likely to be rejected as the provider may doubt whether they can repay the loan on time, given their unsatisfactory financial history. Moreover, even if they get the approval, they may end up paying more interest and fees on the loan than individuals with high credit scores. While one may not have control over the eligibility factor of age, maintaining a good credit score to improve your home loan eligibility is manageable to a great extent. You can maintain a good credit score by punctually repaying credit card dues and loans, fulfilling pending payments on time, and several other ways. 
  4. Debt to Income Ratio - Debt to Income (DTI) indicates the debt you currently owe compared to your demonstrated income. In the UAE, mortgage lenders utilise this ratio to estimate whether an individual will be able to repay their home loan with their current income and financial obligations. You can estimate your DTI by dividing your current monthly debt from your average monthly income and multiplying the ratio by 100. It should be noted that debts of all kinds should be considered (whether you have a car loan, student loan, personal loan, or even credit card dues). It is necessary to maintain a debt-to-income ratio under 50 percent if you wish to avail of further debt.
  5. Loan Term - While not affecting your home loan eligibility directly, you can generally expect less strict eligibility requirements if you opt for a longer repayment term. As your monthly payments will be low with longer loan repayment tenures, you will be required to allot a lower portion of your income towards the debt. However, the downside here is that you will pay more total interest on your loan amount than individuals who opt for short-term loans.

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Mortgage Loan Eligibility Calculator

You can get a clear idea of your monthly payments and the fees you'll need to pay when purchasing a property in the UAE with the mortgage loan eligibility calculator. This tool could be utilised to find the approximate monthly instalment for the plans of your choice and compare all the mortgage products in UAE to ensure that you get the best available deal.

Before finding out about the calculator, given below are some terms and definitions regarding the home loan eligibility calculator that you must check first:

  • Amount: The total borrowed amount, also known as the principal amount
  • Rate (%): Annual interest rate at which the interest will be calculated
  • Years: The specified duration of the repayment tenure
  • Effective monthly payment:  Monthly payment that includes fees and other costs associated with the product. This is the basis for calculating the APR.
  • Calculated Annual Percentage Rate (%): APR is calculated by adding the annual interest rate of the product to fees and other costs. This metric is more useful in getting an accurate picture of the loan costs.

You can use the mortgage calculator in the following ways:

  • Step 1 - Enter the price of the property you would like to buy in the loan calculator.
  • Step 2 - Enter the down payment percentage or amount. Generally, borrowers are expected to pay at least 20% of the cost of the property by themselves, with the figure usually being higher for ex-pats.
  • Step 3 - Provide the interest rate and your preferred loan tenure (up to 25 years in most cases)
  • Step 4 - Calculate the results by clicking the "Calculate" button. The details appearing on your screen will include the applicable monthly payments, total interest to be paid, and more. 

Documents Required for Mortgage Loan Eligibility in UAE

While the documentation requirements for a home loan in UAE vary as per the bank, the following documents are generally required for home loan eligibility by most providers:

  • Passport, Visa, and Emirates ID copy
  • Salary certificate 
  • Payslips and bank statements for the previous 3 or 6 months
  • Recent credit card statements
  • Copy of Dubai Electricity & Water Authority (DEWA) bill or lease agreement confirming your current address

A Guide to Improving Home Loan Eligibility in UAE

  • Choose Long-Term Mortgages - Your home loan term is a major factor in determining your monthly payment, with a longer loan term meaning lower monthly payments. With lower monthly payments, you can keep the Debt to Income ratio in check while also making it easier for you to repay the loan. This factor can improve your provider’s perception of you in terms of your loan repaying capacity. Consequently, if you wish to enhance your home loan eligibility, you can opt for a longer-term loan.
  • Punctually Pay Off Your Debts  - Making timely payments on your debts will improve your credit score, which can enhance your mortgage loan eligibility. Moreover, if you maintain punctuality in repaying your dues and loans, you will be able to manage your finances better while also avoiding penalties for delayed payments. 
  • Reveal All Your Additional Income Sources - Although among the oft-ignored factors, you shouldn’t forget to declare all your income sources to the loan provider. As all your income sources can indicate that you are sufficiently equipped to repay the loan, you can easily ensure the fulfilment of the home loan eligibility requirements.
  • Add a Co-Applicant - If one of your family members has a good credit score and income, you can include them as a co-applicant provided your loan provider has the provision for the same. You will also be able to borrow a larger amount with a co-borrower as the lenders can consider the combined income of the members when evaluating home loan eligibility.
  • Credit Score Improvement - Improving your credit score is a long-term process and requires an individual to be punctual in their repayments with respect to credit card dues, loan instalments, and more. However, with most banks examining your credit score before approving your home loan application and deciding its terms, it is necessary to maintain a good credit score. While there are plenty of ways to improve your credit score, you can start by ensuring that you don’t miss even a single payment on the due date for your credit card bills or monthly payments. Similarly, you should avoid applying for multiple credit products at once as excessive credit checks can reduce your score. 
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