UAE banks support new residents with mortgages

Dubai is witnessing a shift in the mindset of new residents who prefer buying property rather than renting, considering the UAE their new home. As this trend gains traction, banks in the country are realizing the potential these newcomers hold for expanding their mortgage portfolios. Recognizing the changing dynamics of property ownership, banks are keen to facilitate the process for new residents.

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Expanding Opportunities: Dubai Banks Recognize the Potential of New Residents

Market sources reveal that loans are being approved based on the client's first salary credit details, rather than the previous requirement of six months' salary records. However, this remains an exception rather than the norm. According to industry experts, lenders are starting to realize that maintaining the same set of requirements for loans to new residents might cause them to miss out on valuable opportunities.

Challenges for New Residents: Easing Mortgage Access in Dubai

While many new residents have the means to purchase property through all-cash deals, a considerable number still require mortgages to finance their purchases. This poses challenges, especially for those who have recently started their jobs in the UAE and are relatively young. For business owners, the situation can be even more difficult, as most lenders require a minimum of two years of trading history. In an effort to ease these challenges, lenders are introducing initiatives such as considering the client's first salary credit as a qualifying factor. By doing so, bankers acknowledge the need to adapt their requirements and tap into the potential opportunities presented by new residents.

Developers' Role: Making Property Ownership More Accessible

Dubai's developers are also taking steps to make property ownership more accessible to new residents. Some developers are requesting lower down payments, which can be advantageous for those who are just starting their careers and living in the UAE. However, larger developers still typically require construction-linked payments and allow one to two years for clearing outstanding payments after the handover of the property. This can pose challenges for young buyers who are eager to own a home and may not have the luxury of waiting. It is worth noting that the current pool of property buyers in Dubai is skewed toward a younger demographic, in their late 20s and early 30s, who are eager to enter the market without delay.

Balancing Risk and Opportunity: Banks and Mortgage Lending

When it comes to providing mortgages to new residents, banks face the challenge of extending higher loans relative to the property value. While they strive to be accommodating, this poses difficulties due to risk management considerations. Offering higher loan-to-value ratios can be a delicate balancing act for lenders. Nonetheless, some banks are willing to explore options for new-to-country residents, particularly if the applicant has moved to the UAE with the same company they worked for overseas. In such cases, lenders may be more inclined to consider the applicant's continued employment with the same firm as a positive factor. Although options for new residents are not yet widely available, there is room for improvement to increase the pool of potential buyers by including newly installed residents in the UAE.

Non-Resident Investors: Can They Secure Mortgages from UAE Banks?

While most UAE-based lenders do offer non-resident products, only a select few adopt an aggressive approach to lending in this segment. Non-resident investors should be prepared for varying entry costs, with many banks charging a 1% arrangement fee. Additionally, running costs for non-residents tend to be slightly higher than those for UAE residents. Interest rates for non-resident mortgages typically start from 5.14% fixed for a three-year period, with the mortgage tenure being the same. Underwriting policies may vary among banks, as stringent due diligence is typically conducted prior to approval. Overall, while non-resident investors can explore mortgage options from UAE banks, it is important to consider the specific requirements and policies of each institution.

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