How much can I borrow?
- It depends on age, nationality, salary, type of employment etc.
- Some banks say you can borrow 7 times your annually salary. (1)
- Other banks say you can borrow 70 times your monthly salary. (2)
- Many banks say your monthly salary needs to be at least 4 times your mortgage payment. (3)
- Some banks uses their current interest rate as a base for calculating the mortgage.
- Other banks will add 1% or 2% on current rates in case of future interest rate fluctuations.
- The maximum loan term is 25 years according to UAE Central Bank regulations.
- Are you under the age of 40 years you can have a maximum loan term up to 25 years.
- Are you over the age of 40 years the maximum loan term is up to the age of 65 years.
- Are you self-employed the maximum loan term is raised up to the age of 70 years.
Let’s say you want to borrow 1,000,000 AED for the maximum 25 year-period. How much do you need in monthly salary?
- You are under the age of 40 years.
- Have a steady job and fixed income.
- You have no other loans.
- You choose a fixed repayment rate during the 25 year mortgage loan period (fixed rate = the same sum every month).
- The interest rate is 4%.
- (1) Your monthly salary has to be 11,905 AED. 1,000,000 AED / 12 months / 7 = 11,905 AED.
- (2) Your monthly salary has to be 14,286 AED. 1,000,000 AED / 70 months = 14,286 AED.
- (3) Your monthly salary has to be 13,333 AED. 1,000,000 AED / 25 years / 12 months x 4 = 13,333 AED
- In lowest case your monthly salary needs to be 11,905 AED to borrow 1,000,000 AED.
- In highest case your salary has to be 14,286 AED to borrow 1,000,000 AED.
These factors will decide how much you can borrow:
- Annual income
- Nationality (local or expat)
- Employment status
- Type of employment (employed by a company or self-employed)
- Salary type (fixed or bonus-based)
- Existing loans and debts
- Personal circumstances
- The property value
- The current bank interest rates
- Personal health
- Smoker or non-smoker
It all depends on what the bank thinks you can afford to borrow and pay back.