Investment Finance In The United Arab Emirates

Various financial options are open to overseas buyers in the UAE. Below is an overview of the investment finance currently available.


Financing your purchase in the UAE could entail injecting some of your own funds or, as most investors prefer, a mortgage or equity release scheme.

Mortgages

Mortgages are now widely available from most banks and some financial institutions in the UAE, with interest rates currently at 6% from HSBC. You can borrow for property purchase or buy-to-let investment and the lending criteria will vary from one lender to another. In general, purchasers can expect to get 80% mortgage on the value of the property if they are residents and 70% if they are non-residents. The mortgage term can run for 20 years, but must be paid by your 60th birthday.

Borrowers must select between conventional mortgages and Islamic mortgages. 70% of Islamic mortgages are, interestingly enough, granted to non-Muslims who benefit from the fact that there is no charge for early repayment of the loan.

Prior to going ahead and paying your deposit on a chosen property, it is wise to consider the following:

  • It is sometimes still difficult to obtain finance for non-residents and offshore companies and collateral is often required
  • Non-UAE nationals must pay back UAE mortgages by the age of 60. Therefore, if you are approaching 60 years of age, be aware that for a conventional mortgage you will need to pay an early repayment fee
  • It is wise to consider both types of mortgage facility: conventional or Islamic. Islamic finance may actually be most appropriate, even if you are not Muslim
  • Make sure the developers of your project are able to tell you which banks are providing finance for their properties, as not all banks lend on all developments
  • In some cases, developers have signed agreements with banks to be exclusive mortgage providers for a specific development. In this case, you may be tied down one mortgage provider, without the option to shop around for better rates and payment options
  • Many developers require buyers to have paid at least 25% of the purchase price in stage payments before giving them the green light to sell on their contracts
  • Some lenders will not give final approval for the loan until the Purchase Contract is signed and handed over to the bank. This can mean that your finance may not be confirmed at the time of purchase, meaning you could be at risk if the next installment is due near to the transfer date and there is a delay in obtaining the original Purchase Contract from the developer
  • With critical illness affecting one in four of us, life insurance is obligatory to obtaining a mortgage, but can sometimes take months to organise. You’ll need to be sure that the insurance is in place at the time of activating the loan.

Click here to get a quote for a mortgage in the UAE

Off-Plan Financing

Off-plan developments in the UAE offer installment plans over between 12 to 60 months. The charges applicable vary according to developer and repayments are usually index linked. The developer can sometimes offer the most competitive finance options and these are certainly worth considering in conjunction with mortgage alternatives.

As always, before making a commitment, we recommend you discuss your investment strategy with a lawyer, a reputable property agent with experience in the area and even a financial advisor.

1. Equity Release

Equity release is simply a way of releasing some cash from the home without having to sell up and move house. If you have property in your own country and would like to borrow against this in an equity release plan, we can introduce you to independent financial advisors who will assist you in raising the necessary finance for your investment property in the UAE.

If you are in your mid-50s or older and own your own home, you may be able to get a cash lump sum, a regular income, or both, by using an equity release scheme based on the value of your property. These schemes can be helpful in certain circumstances to raise money for a mortgage to finance your investment property in the UAE.
To learn more about financing your investment property in the UAE in this way, please visit our equity release section.

2. Alternative Finance

Not everybody falls into a category and some investors will need to raise alternative finance to equity release or mortgage options. There are a number of other borrowing facilities available to investors of property in UAE and our advisors will gladly put you in touch with professionals who can help.

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