UAE mortgage limits explained: Central Bank rules allow up to 80% of a first home for expatriates and 50% off-plan, over at most 25 years

The loan-to-value limits

Article (3) of the Central Bank's Regulations Regarding Mortgage Loans, Circular No. 31/2013, sets the maximum loan-to-value ratio, the loan as a share of the appraised value of the home. For expatriates buying a first home to live in, the limit is 80% of the value when the property is worth AED 5 million or less and 70% when it is worth more than AED 5 million. For a second or later home, or an investment property, the limit is 60% whatever the value. For UAE nationals the same three limits are 85%, 75% and 65%. Each borrower can claim only one property as a first home. For any property bought off-plan, the maximum is 50% regardless of purpose, value or category of buyer, because of the longer development period and the higher risk to completion. The first-home limits were raised by Central Bank Board of Directors Resolution No. 31/2/2020, in force from 8 April 2020.

Term, income and repayments

The maximum term of a mortgage is 25 years; each lender sets the maximum age at the last repayment under its own policy. The debt burden ratio, all debt repayments against income, may not exceed 50% of gross salary and other regular income, and lenders must stress-test the loan at 2 to 4 percentage points above the current interest rate. The total loan is also capped at 7 years of annual income for expatriates and 8 years for UAE nationals. Repayment must come from salary or verifiable business or rental income; end-of-service benefits may not be used. For an investment property, the lender must deduct at least two months' rent when it assesses repayments. Interest-only periods are allowed only on investment loans and for no more than 5 years from the first drawdown.

What the bank must tell you

Article (4) asks lenders to give the borrower clear information on the costs and risks of the loan, including all fees, charges and the interest or profit rate and how it is calculated, with the fees in a separate schedule attached to the contract and the total cost of the loan over its life. The terms may not be changed during the loan unless the borrower agrees in writing, and customers must be told at least two months before any change to commissions or fees. Charges for early repayment or for moving the loan to another bank are limited to the lender's actual cost and the fees allowed under Regulations No. 29/2011. Separately, Article (2) says that when a home is still being built and the loan is paid in stages, the lender must first use the buyer's own share to pay the developer before it releases any of the loan, and its stage payments must follow completion milestones that are physically confirmed.

What Al Mithaq adds

Our UAE residency page lists projects in Dubai, Abu Dhabi and Sharjah and lets you check in two taps which residency your budget opens. Our team in Kuwait can send the payment plan of any home you like, show how much you would pay before handover and after it, and give you the list of documents banks usually ask for, so you can talk to a bank with the numbers in hand.

Sources

• Central Bank of the UAE Rulebook, Regulations Regarding Mortgage Loans, Circular No. 31/2013 (in force from 28 December 2013; consolidated version as of 8 April 2020)
• Central Bank of the UAE Rulebook, Board of Directors Resolution No. 31/2/2020 amending Circular No. 31/2013 (effective 8 April 2020)
• Al Mithaq, Buy property in the UAE for residency page