Many buyers in the UAE finance part of their purchase with a mortgage. Before you start viewing properties, it helps to understand how much a bank may lend you and how much you will need from your own funds.
What loan-to-value means
Loan-to-value (LTV) is the loan amount as a percentage of the property's value, usually the lower of the price and the bank's valuation. If the maximum LTV for your case is 80%, the remaining 20% is your down payment, and the purchase costs (such as registration fees) come on top.
Who sets the limits
Maximum LTV ratios for UAE home loans are set by the Central Bank of the UAE in its mortgage regulations, which were introduced in 2013. The limits differ according to:
- whether you are a UAE national, a resident expatriate or a non-resident;
- whether it is your first home or an additional property;
- the value of the property (the rules distinguish homes up to and above AED 5 million);
- whether the property is ready or off-plan.
Banks then apply their own criteria within these limits, so two lenders may offer different amounts for the same buyer. Market guides currently quote up to 80% for a resident expatriate's first home of AED 5 million or less, but the exact figure for you should always be confirmed with the bank, because regulations and lending policies change.
Other factors banks consider
- Your income and existing debts: the total monthly repayments are capped as a share of income.
- Your age: the loan term must normally end before a maximum age.
- Your employment and residency status, and your credit history in the UAE.
How to prepare
- Ask a bank or a mortgage adviser for a pre-approval before you make an offer.
- Budget for the down payment and for purchase costs, which are paid separately from the loan.
- For off-plan purchases, check how the payment plan works with financing, since banks lend differently on homes under construction.
ORA Properties can introduce you to mortgage advisers and help you choose properties that fit both your budget and your financing.