There is a lot of confusion regarding how to obtain a mortgage in the Middle East. If you are self-employed or an expatriate there can be quite a few hurdles to pre-approval. But hopefully today we can provide you with a general overview of the process.
1. Meet with a mortgage advisor Mortgage advisors and mortgage brokerage firms can help you identify which mortgage is best for you. They are partnered with most UAE banks and can present you with an overview of the interest rates and packages. This will save you time and give you a broader view of the offerings. You can contact one independently, independently, but most real estate firms have an in-house advisor available.
2. Get pre-approved After your advisor meeting and after selecting the bank, documentation needs to be submitted to both the advisor and the bank. This is to obtain the pre-approval, a declaration of your credit and financial merit. The pre-approval will outline the loan amount, loan-to-value, and interest rate and is valid for 60 days. This is handy for you, as the buyer as you know exactly what budget to stay in. Keep in mind, that this is the most time-consuming process, can take weeks, and should be settled before selecting a property or signing on.
3. Valuation Once you have selected your property and the Memorandum of understanding (MOU) is signed, the bank will proceed with evaluating the property. This analysis is conducted by a third party and the report produced states the fair market value of the property. The valuation is essential since the property will be collateral during the escrow process. If the valuation turns out to be lower than the MOU price, you will be responsible for covering the difference. This valuation is valid for 45 days.
4. Obtain final approval The final stage in getting a mortgage is signing a final approval letter. This explains all the terms of the financing. Your mortgage advisor will help you review the documents and then you can proceed with the purchase, snag inspection, and all the other aspects of buying an apartment. Following the signing of this agreement, the bank will open an account in your name and expect you to deposit the necessary funds. Once this is completed, the bank will issue cheques to the seller/ developer.
5. Property transfer & new title deed
Once all the cheques go through. The bank will schedule the transfer of the property at the
Dubai Land Department (DLD). When all such formalities and payments are completed, a new
title deed will be drawn up, which means you are now a property owner