With more than 30 mortgage lenders in the UAE, finding a financing for your dream home has never been more accessible.
But a word from the wise: you should get your mortgage in place before you start looking for real estate in Dubai. Raman Muralidharan, a regional head of customer value management at HSBC said: "Once you have your approval in principle, you know exactly how much you can borrow, and your property price range. At that point, you can start property hunting seriously."
“You can get a rough idea of how much your mortgage will cost each month by using a free online digital calculator offered by many lenders, including HSBC” Muralidharan also says.
So if you want to get your mortgage done, follow these really cool tips to get a mortgage for your home!
#1: Ask a mortgage broker.
Finding a way to finance your home can be really daunting. There are a lot of factors you have to take into account. So you may want to ask a mortgage broker’s help. They will help with application forms, mortgage insurance, salary transfers, liability letters and other paperwork.
If you enlist a mortgage broker, they do the legwork and will work with you to figure out which loan best fits your needs. But they typically charge 1% to 2% of the loan amount.
#2: Save up for your down payment.
You need at least 20% down payment to secure financing, but if you can put down 25%, you may qualify for an even better interest rate. If you don't have the down payment yet, you can try to obtain a second mortgage on the property, but it's likely to be harder.
#3: Have a good credit rating
Financiers or lenders always check their credit rating before making a deal. A lower credit rating can make your interest rates go up or it may be a good enough reason turn you down.
#4: Determine your budget and stick to it
Doing research like finding the type of home that fits your budget, something that you can afford. Determine an area and compare prices to get a ballpark figure. Figure out the following for creating your budget:
- Monthly debts
- Estimated cost of living expenses
- Amount saved for a down payment
Also, under Central Bank rules, your monthly mortgage instalments, and other debt repayments, should not consume more than 50 percent of your income. Use online mortgage calculators to get a feel for how much your monthly payment might be.
#5: Review your finances
Your finances will be investigated, so make sure you have everything you need to back up the numbers. Have you opened a bank account in the past six months? Have been gifted any money recently? Be prepared to tell the lender why.
You might need these documents:
- Two forms of government identification
- Two years of tax returns
- Two years of income statements
- Proof of all assets
This isn’t an exhaustive list, but getting your mortgage paperwork right the first time is a huge win in the process to secure a mortgage for the home of your dreams.
#6: Get a pre-approval
While a pre-approval isn’t a guarantee that you can get a loan/mortgage, you can consider this as a test run/trial of the mortgage process. During pre-approval, the lender will do a credit check and go over your income statements to determine your financial capability. It’s recommended to go to at least three lenders to ensure you get the best real estate property