Dubai Real Estate: Home Loan vs. Mortgage – Which is a Better Property Financing Option? Experts Weigh In

As Dubai’s property market continues its upward trajectory, potential homebuyers face a crucial decision: DECIDING BETWEEN A NORMAL HOME LOAN OR A Mortgage. This choice has profound consequences for at least the financial outlook in the long-term and the possession of assets. The following are the advantages and disadvantages of each option within the UAE’s legal framework according to the experts.

Home Loan vs. Mortgage: Introduction to the Basics

Even though the home loans and mortgages share the common characteristic of applying for a loan with the home as the collateral, there are certain distinctions that potential homeowners need to be familiar with.

Jeffrey De Souza, Head of Financial Services at Lomond Financials Services, explains:Jeffrey De Souza, Head of Financial Services at Lomond Financials Services, explains:

• Home Loan: A mortgage loan that is utilized for the acquisition of residential homes with the help of a lender. Commonly used term in the Middle East.
• Mortgage: A more comprehensive financial instrument that resembles more what European expatriates might be more familiar with: the mortgage.

Some Distinctions and Costs

Mike Coady, a Dubai-based financial advisor, highlights the subtle differences and the pros and cons of each:Mike Coady, a Dubai-based financial advisor, highlights the subtle differences and the pros and cons of each:

Home Loans

• Pros:
• Lower interest rates.
• The property itself is used as collateral.
• Cons:
• It has a very high down payment requirement.
• Stringent eligibility criteria.

Mortgages

• Pros:
• The following is a list of the possible uses of fracking according to the type of property involved.
• Accessible to non-residents.
• Longer repayment periods.
• Cons:
• Higher interest rates for non-residents.
• Potential for changing interest rates.
• Intricate approval processes.

Mortgage Requirements in Dubai – Elucidation of the Process.

To qualify for a mortgage in Dubai, buyers generally must:To qualify for a mortgage in Dubai, buyers generally must:

• To be at least twenty one years of age.
• The requirements include; Must have a valid UAE residence visa for the residents.
• Self-employment proof of income and employment.
• Some of the fundamental factors that you should have include a good credit score.
• Submit the following: passport copies, bank statements, employment letters.

Jo Phillips, the managing director at Phillips & Walls Mortgage Brokers said that residents have to have a job, a visa and the salary must be credited into a UAE bank account. Interest rates today start from 3. 89% to 5. Fifty percent, with differences by profile and employment status with most being within the middle range.

Down Payments and Interest Rate

De Souza explains the down payment requirements:De Souza explains the down payment requirements:

• For transaction value up to AED 5 million, the discount is given at the rate of 20%.
• For transactions of more than 5 Million AED, the commission remains at 30%.
• 40% for the second and subsequent mortgages.