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Are you on the lookout for a good mortgage plan? Chances are you are already overwhelmed. There are tons of information available on the internet. However, you need to understand the basics of mortgages in the UAE to make a well-informed decision.
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To qualify for a mortgage in the UAE, you must meet specific criteria. While requirements may vary among lenders, common criteria include:
You might be surprised to learn that there are five different types of mortgages available in the UAE. Understanding each type will help you choose the one that best suits your needs. Here’s a detailed look at the options:
A fixed-rate mortgage offers predictability by keeping the interest rate constant throughout the loan term. This consistency makes it an excellent choice for those who prefer stable and predictable payments.
Islamic mortgages comply with Shariah law and come in two variations:
With an interest-only mortgage, borrowers pay only the interest for an initial period (typically 5-10 years). After this period, they begin making both interest and principal payments.
A variable rate mortgage starts with a fixed interest rate that later fluctuates based on market conditions. It initially operates as a fixed-rate mortgage before transitioning to a variable rate.
An offset mortgage is linked to a savings or current account. The mortgage balance is offset by the savings balance, reducing the interest payable. This arrangement offers flexibility in managing interest costs.
Applying for a mortgage in the UAE is relatively straightforward, but hiring a professional chartered accountant can be beneficial. Here’s a step-by-step guide to the process:
Start by researching banks and financial institutions offering mortgages. Compare interest rates and loan terms, then shortlist potential lenders. Submit a pre-approval application with financial and identification documents. The lender will assess your financial situation and issue a pre-approval letter indicating the maximum loan amount you qualify for.
Once pre-approved, search for properties within your approved range. Consider factors like location and nearby facilities. Send an offer to the property owner, and upon agreement, sign a sales agreement and move to final mortgage approval.
Hire a legal representative to help with legal documents, ensuring a smooth process. Prepare all paperwork and draft an agreement agreeable to both parties. Carefully review the fine print to fully understand the agreement.
After completing the legal work, make a down payment to the seller. The lender then disburses the funds to the seller, and the property is transferred to your name.
FINCHOICE Solutions can assist you throughout this process, offering expert advice and ensuring you make the best financial decisions.
Applying for a mortgage in the UAE involves several fees. While these may vary, here are some common costs:
Discuss all fees and interest rates with the lender in advance to ensure they align with your budget. Consult a professional for guidance, and let FINCHOICE Solutions help you secure the best financial deals.
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