How to Get Mortgage Home Loan pre-approval in Dubai
Firstly, know the upfront costs associated with pre-approval. The UAE Central Bank requires that a minimum of 25 percent of the total purchase be deposited as a down payment from anyone who is a non local until a property reaches a value of AED 5 million or more. Additionally, the Land Department charges a 4 percent transfer fee and a registration fee totaling 0.25 percent of the total mortgage in Dubai.
There are also costs associated with paying a real estate agency, usually around 2 percent to cover commission. There will also be a valuation fee, often somewhere around AED 3,000. Lastly, your loan provider is likely to charge a 1 percent loan establishment fee. Some banks have begun to allow borrowers to defer most of these payments to the loan itself, meaning they do not require upfront payment.
Make sure not to sign any sales agreements before being preapproved by a lender. This is because any sales agreement requires a 10 percent deposit, which will not be refunded should you fail to secure financing. This is why it is prudent to work with a mortgage broker who is experienced in navigating the fees and policies of various lenders, which will help you avoid losing time and money on useless applications without returns.
You should also add a property valuation clause to any sales agreement before signing. This will secure your deposit should a lender reject your financing application on the basis of a lower than expected property valuation. These valuations can also be done before signing. Regardless, be sure to protect yourself in either case or else risk losing your deposit entirely.
Lastly, keep in mind that banks look at what you can afford when deciding whether to give you a loan, usually capping their loans at 25 percent of your monthly income. This is because lenders want to be sure that you can pay back what you have borrowed over time. Be sure to check with a variety of banks, as they often have different criteria and may offer you more or less than competitors.