Over the past 10 years, the real estate market has changed dramatically in terms of real estate financing. The number of transactions with financing has increased significantly and has become the norm in the local real estate market.
Mortgages from national and international banks are available in Dubai for both UAE residents and non-residents. However, other alternative forms of financing are now available. These should also be considered when buying a property.
When purchasing an existing property, at least 20 percent or, as a non-resident, 50 percent of the purchase price must be contributed as equity. 80 percent or 50 percent can be financed by a local mortgage.
The maximum term of a mortgage is 25 years. In Dubai, the entire investment is amortized over the agreed term.
Financing options also exist for new construction projects. However, for new construction projects, only 50 percent of the purchase price can be financed through a bank. The other half must be contributed as equity. The maximum term is 25 years.
Mortgage interest rates range between 3-4 percent. Since the dirham is pegged to the US dollar, interest rates in Dubai are similar to those in the US.
Meanwhile, the large and established real estate developers offer their own financing solutions. The developers Emaar, Dubai Properties and Nakheel in particular offer extremely attractive financing solutions.
These allow the buyer to make interest-free repayments within five years of handing over the property. The administrative effort involved in such financing is low and it is often cheaper than conventional financing.
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