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For most potential buyers, especially first time buyers, the biggest challenge to getting on the housing ladder is raising the initial down payment required to get a mortgage. Earlier this year, the Central Bank of the UAE increased the loan-to-value amounts for first time buyers in the UAE by 5%, to 80% for expats and 85% for UAE nationals. This means that banks are now allowed to lend more, so borrowers require a smaller down payment. The new regulations have reduced the down payment required by first time buyers to 20% for expats and 15% for UAE nationals (for purchases under AED 5 million), from 25% and 15%, respectively. The reduction in down payment requirements makes buying more achievable for some since it means less cash is required upfront. Put into context, for a property purchase of AED 1 million, previously a down payment of AED 250,000 would have been required. Whereas now, as an expat for example, you would need just AED 200,000 – a saving of AED 50,000! This is an exciting prospect for many potential first time buyers in the UAE as it can help in taking some pressure off when it comes to raising the down payment, or in cases where you have the down payment ready, this reduction can help make your money go further. In addition to the down payment there are certain fees associated with purchasing which are also required upfront, this is an aspect sometimes overlooked by buyers early in the process. Purchasing costs are normal in most countries, generally made up of fees and taxes. In Dubai the fees amount to approximately 7% of the purchase. To help buyers further, especially where upfront cash may be an issue, a select number of banks allow you to include some of the purchasing fees within the mortgage. Prior to the recent increase in borrowing capacity (loan-to-values) by the Central Bank, including fees within the mortgage would enable you to raise your buying power by up to 18%. However, following the changes this can now increase buying power by up to 24%! As an example, in 2019 if you had a down payment of AED 500,000 ready, you would have been able to afford a property of up to AED 2 million. In this scenario, if you then included some of the fees within the mortgage (namely, 75% of the 4% DLD fee and the 2% real estate fee), the savings made in the upfront cash required could be put towards raising your down payment and increasing your buying potential by 18% – so you could afford a property of up to AED 2.95 million. This example is illustrated in the table below. Not including fees Including fees Purchase price AED 2,500,000 AED 2,950,000 Down payment required AED 625,000 AED 737,500 DLD fee AED 100,000 AED 29,500 Agent fee AED 50,000 AED 14,750 DLD fees (miscellaneous) AED 9,758 AED 9,758 Valuation fee (approx.) AED 3,150 AED 3,150 Total cash required AED 787,908 AED 794,658 Let’s now look forward to today, continuing with the same example of a down payment amount of AED 500,000. With a down payment requirement of 20%, you can now purchase a property of AED 2.5 million instead. Then, to go a step further we can again include the fees within the mortgage. At this stage we can include 80% of the DLD fee and real estate agent fee, in line with the increased loan-to-value ratio, raising your buying potential by a massive 24% up to AED 3.1 million! Not including fees Including fees Purchase price AED 2,500,000 AED 3,100,000 Down payment required AED 500,000 AED 620,000 DLD fee AED 100,000 AED 24,800 Agent fee AED 52,000 AED 15,500 DLD fees (miscellaneous) AED 10,370 AED 10,370 Valuation fee (approx.) AED 3,150 AED 3,150 Total cash required AED 666,020 AED 673,820 Including the fees within the mortgage is a great option to help save on upfront costs and make your money go further. Find out how much further your funds can go, get in touch with us today!

Applying for a mortgage in the UAE can be exciting, but it can also be stressful, especially if your application is rejected. Understanding the important reasons why lenders may reject your home loan application can help you avoid common pitfalls and increase your chances of approval. In this article, we’ll explore the top reasons for rejection, how banks evaluate applications, and practical steps on what to do if your mortgage loan application is rejected. Buying property is a major financial decision, and knowing the red flags before you apply can save time, money, and frustration. Why Mortgage Applications Are Rejected in the UAE There are several factors lenders consider before approving a home loan. Being aware of these can help you prepare a stronger application. Here are the important reasons why lenders may reject your home loan application: 1. Low Credit Score A poor or insufficient credit history is one of the main reasons applications are rejected. Banks look for evidence that you can manage debt responsibly. If your credit score is below the minimum requirement, lenders may see you as a high-risk borrower. Tip: Check your credit report in advance and address any discrepancies to avoid rejection. 2. Insufficient Income Lenders assess your monthly income to ensure you can comfortably cover mortgage payments. If your income is too low compared to the loan amount requested, your application may be rejected. Tip: Prepare proof of income documents like salary certificates or bank statements to demonstrate stability. 3. High Debt-to-Income Ratio If you already have multiple loans, credit cards, or other financial obligations, lenders may consider your debt-to-income ratio too high. This is a common important reason why lenders may reject your home loan application. Tip: Pay down existing debts before applying or reduce your requested loan amount to improve approval chances. 4. Incomplete Documentation Applications can be rejected simply because of missing or incorrect documents. Banks require identification, proof of income, residency details, and sometimes a property valuation. Tip: Ensure all documents are complete and accurate before submission. Double-check requirements with your mortgage advisor. 5. Unstable Employment History Frequent job changes or gaps in employment can make lenders cautious. They prefer applicants with steady employment, ideally in the same sector or company. Tip: If you recently changed jobs, provide an employment contract or reference letters to support stability. 6. Property-Related Issues Sometimes, the property itself can affect approval. If the property is off-plan, has legal disputes, or falls outside approved zones, the bank may reject the mortgage application. Tip: Verify property status with the developer and ensure it meets bank and RERA requirements. 7. Age Restrictions Most lenders have age limits for mortgage applicants. If you are too young or approaching retirement, your application may be rejected. Tip: Understand age limits early and plan loan terms accordingly. What to Do If Your Mortgage Loan Application Is Rejected Even if your application is rejected, it doesn’t mean the end of your property dreams. Knowing what to do if your mortgage loan application is rejected can help you take corrective action and reapply successfully. 1. Ask for a Reason Most banks will provide feedback on why your application was rejected. This insight is critical in understanding the obstacles and addressing them. 2. Review Your Credit Score Check your credit history for errors or outstanding debts. Improving your credit score can significantly boost your chances of approval next time. 3. Reduce Existing Debt Lowering your debt-to-income ratio by paying off loans or consolidating credit can improve your profile in the eyes of lenders. 4. Increase Your Down Payment Offering a larger down payment can reduce the lender’s risk, making approval more likely. This is particularly effective if your income is on the lower side of the eligibility spectrum. 5. Provide Additional Documentation If your rejection was due to missing or insufficient documents, prepare a complete, organized set of papers for your next application. 6. Consider a Mortgage Broker A mortgage broker can review your profile, suggest lenders more suited to your circumstances, and guide you on what to do if your mortgage loan application is rejected. They can also help with paperwork and negotiations. 7. Reapply After Some Time After addressing the issues cited in the rejection, you can reapply. Banks may reconsider your application if your financial profile has improved. Tips to Avoid Rejection Being proactive can reduce the chances of your mortgage application being rejected. Consider these best practices: Common Misconceptions About Mortgage Rejection Understanding the important reasons why lenders may reject your home loan application and knowing what to do if your mortgage loan application is rejected can make a huge difference in securing financing. A rejected application is not the end—it’s an opportunity to strengthen your profile, correct issues, and reapply with confidence.

Banks require consistent income for set timeframes when approving a mortgage as this indicates job security and a clear ability to repay the home loan. When there are inconsistencies or multiple sources of income, issues and questions can arise. If these are not dealt with in the right way it can often lead to a declined mortgage application. The clients in this case study were a married couple who just had their first child. Both were expatriates that had been living in Dubai for several years and working for a reputable aviation company. This property purchase was their first in the UAE; they owned property in their home country. The clients were planning to buy a villa in Arabian Ranches to give them more space for their newest family member. The problem We had been recommended to the clients by their friend who had used our services previously. The clients had attempted to secure a mortgage themselves before contacting us – they had applied directly to a well known bank, however, their case had been declined which led them to approach us. The clients were facing two hurdles in securing a mortgage. The first was due to multiple sources of income. The second was inconsistencies in income within the last 6 months, which caused issues in meeting affordability criteria. Following the birth of their child, one of the clients had taken three months maternity leave and had just recently returned to work. During the three-month maternity leave, the client was only paid her basic salary, but when working normally the client was entitled to her basic salary plus an additional sum for the unusual and long hours she worked. However, as she had not received this pay consistently for six months prior to the mortgage application, several banks would not take it into consideration as their affordability criteria meant they were required to look at average pay over a six-month period. Furthermore, some banks would only take into account her basic salary and not the additional income which she received every month, even though this was a regular income which could be evidenced in her bank statements. Our solution We used our in-depth knowledge and experience of the various banks’ policies and criteria to consult with the ones that we knew would be most likely to consider this application. We took the time to explain the case to our contacts at the banks and found a lender which would consider the clients’ additional income, as well as take into account the average of just three months income for the affordability checks, rather than six, given the clients’ circumstances. The result We managed the full mortgage journey for clients and worked closely with the other parties throughout the buying process. The clients were able to complete the purchase smoothly and stress-free. They bought a three-bedroom villa in Arabian Ranches within a short space of time after their first conversation with us.

When buying property in Dubai or across the UAE, choosing the right mortgage type is a major financial decision. While most homeowners opt for traditional repayment mortgages, some buyers consider an interest only mortgage as a way to reduce monthly costs in the short term. But is it the right option for you? In this blog, we’ll explain what an interest only mortgage is, how it works in the UAE, the pros and cons, and why calculating interest only mortgage costs carefully is essential before committing. What Is an Interest Only Mortgage? An interest only mortgage is a type of home loan where, during an initial period (usually 5 to 10 years), you only pay the interest on the loan, not the principal. This means your monthly payments are much lower compared to a standard repayment mortgage. However, at the end of the interest-only period, you still owe the full principal amount, and payments may increase significantly unless you refinance, sell, or switch to a repayment mortgage. For example: Monthly payment = AED 6,667 (only interest).But the principal (AED 2,000,000) remains unchanged after 5 years. This is why calculating interest only mortgage figures upfront is critical. How Do Interest Only Mortgages Work in the UAE? In the UAE, interest only mortgage products are less common but are offered by certain banks, often with stricter eligibility requirements. They’re typically available to: Key Features in the UAE Advantages of an Interest Only Mortgage Lower Monthly Payments During the interest-only phase, your payments are significantly reduced, freeing up cash for other expenses or investments. Flexible for Investors Property investors may use the lower monthly payments to cover costs while maximizing rental income. Short-Term Affordability For expats who plan to resell within a few years, an interest only mortgage can make property ownership more accessible without committing to high monthly payments. Drawbacks to Consider Principal Doesn’t Decrease Since you’re not repaying the actual loan, the principal balance remains the same. Payment Shock Later Once the interest-only period ends, repayments can rise sharply. Without proper planning, this can strain finances. Higher Overall Cost Over the long term, an interest only mortgage may cost more than a standard mortgage because the principal isn’t reduced early. This is why calculating interest only mortgage affordability both during and after the interest-only phase is so important. Calculating Interest Only Mortgage Costs To decide whether this product suits you, you need to run the numbers carefully. Formula for Interest-Only Payments Monthly Payment = (Loan Amount × Interest Rate) ÷ 12 Example: But after the term ends, you’ll either: Tip: Always use a UAE-specific mortgage calculator for accuracy when calculating interest only mortgage options. Who Should Consider an Interest Only Mortgage? An interest only mortgage may suit you if: However, it’s not ideal for buyers seeking long-term stability or those with limited financial flexibility. Alternatives to Interest Only Mortgages If the risks outweigh the benefits, you might consider: Comparing these with interest only mortgage options is key to making an informed choice. Frequently Asked Questions Q: Can expats get an interest only mortgage in Dubai?Yes, but availability is limited, and banks may impose stricter criteria compared to residents. Q: What happens after the interest-only period ends?You’ll need to start principal + interest payments, refinance, or sell the property. Q: Is an interest only mortgage cheaper in the long run?Not necessarily. While monthly payments are lower at first, total costs may be higher unless property values rise. An interest only mortgage can be a helpful tool for certain buyers in the UAE, especially investors or short-term property owners. But because the principal doesn’t reduce, you must plan carefully for the future. Always focus on calculating interest only mortgage repayments both during the interest-only period and beyond to avoid surprises. For more information on interest-only mortgages or to discuss your options, get in touch with us today.

When purchasing a property off-plan, many buyers opt to take a mortgage to cover the final payment due to the developer upon completion, also known as a handover payment. In this case study our client was on a tight deadline to settle the final payment to the developer for her new property. Having previously been declined a mortgage The client was a Romanian national residing in Dubai and working as cabin crew for a major airline in the region, she had previously approached a number of banks directly to secure a mortgage but with no success. Referred to us by her real estate agent, the client was looking to secure a mortgage to cover the final payment to the developer for an off-plan property purchase in Jumeirah Village Circle. Having already paid 25% of the property price, the client only required a 75% loan-to-value (LTV) mortgage. As the property was due to handover soon, at which point the client would be required to cover the final payment, she was on a strict deadline to secure the mortgage to avoid incurring significant late payment fees from the developer. The problem The client’s employer provided her accommodation as part of her employment package. However, they had agreed to pay her a housing allowance as a lump sum after she had vacated the employer-provided accommodation. In order to meet the affordability criteria for a mortgage the client was hoping to have her housing allowance considered as part of her income. The reason her application was declined prior to working with us was because her housing allowance was to be paid in the future. This meant most banks would not consider it as part of her mortgage affordability as the funds were not readily available. At our first meeting with the client we also became aware that the developer she was purchasing from did not provide a title deed upon handover (it would be provided later down the line). This meant we would also need to find a bank that would be happy to lend on this basis. We proceeded with the case and submitted a new mortgage application on behalf of the client. We selected a lender that we knew would definitely include her housing allowance, as well as consider her application knowing there would not be a title deed provided upon disbursement (completion). We managed to secure pre-approval for the client within two days, but all was not plain sailing from this point. Following pre-approval the bank moved forward to valuation of the property. However, at valuation stage the bank’s preferred provider undervalued the property by 15%. In some cases this may not have been an issue as there are ways which we can work around this. However, the client had already signed a Sales and Purchase Agreement (SPA) prior to working with us. This meant she was now committed to purchasing the property at a certain price. If we were unable to secure a mortgage for the full outstanding amount and within the given time-frame, then the client would either have to find the funds elsewhere to cover the shortfall, or would have to pull out of the purchase completely and forfeit the money she had already paid the developer. Our solution When we looked into the case a little further, it became clear that the original valuation provider had not taken all factors into account when valuing the client’s property. The unit that the client was purchasing had additional features, one of which was balcony access, making her unit more desirable and therefore more expensive than other units within the development. In light of this, we worked hard and used our good relations with the bank to get them to allow a second valuation of the property with a different provider to get another, third-party opinion at the bank’s cost. The second valuation came back in line with the exact price of the property and the SPA that the client had signed. The result The bank agreed to lend, taking into account the new valuation. We successfully secured the right mortgage for the client within the limited time frame, avoiding her having to pay additional monies in late payment fees and also having to look for alternate funds to make up the shortfall in the original valuation. How can we help you? Having operated in the UAE market for many years, our team has a lot of experience in knowing which banks to approach based on your profile and requirements. We have also developed strong working relationships with the banks.