Dubai Homes and Mortgages
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Sorting out the mortgage for a Dubai home can seem a daunting and slow process to non-UAE nationals, but increasing numbers of buyers believe that the benefits (financial and otherwise) of owning a place in one of the UAE's most vibrant cities are worth the effort.
As explained in our guide to buying property in Dubai, foreigners do not have the officially sanctioned right to purchase a property freehold, but the Crown Prince of Dubai has promised this right, and many property transactions are going ahead with this in mind.
The largest mortgage lender for Dubai home buyers is Amlak, which can provide up to 70 per cent of the home's value to buyers from overseas. However, you may first have to open an Amlak account. You probably won't be able to get a mortgage for buying a Dubai home from a bank in Britain, because the lender here would need a special licence and because banks need to be able to lend against the freehold. However, remortgaging a UK property to raise the money to buy your Dubai home would be possible, but if you do decide to take this route, beware of currency fluctuations, especially if you are bringing the money to Dubai in gradual stages. The UAE dirham is pegged to the US dollar, and exchange rates fluctuate. (See our page on Dubai Currency for more information) Some people use a wholesale currency dealer to avoid this problem by fixing an exchange rate over a certain period. It's a similar principle to that which applies when you take out a fixed-rate mortgage; you don't necessarily save money in the long run (although you might) but it may be worth it to avoid any nasty surprises and secure peace of mind.
International banks, like HSBC and Lloyds TSB, are worth considering for your home loan, particularly if you already have an account with the UK branch of such a bank.
If you are already a UAE national using a local bank, Dubai home loans are a different story. Most Islamic financial institutions comply with Sharia law, traditional Islamic law drawn from several sources. Sharia law prohibits either paying or charging of interest, which means that mortgages as we know them in the West are out of the question. However, the extent to which banks stick to Sharia principles does vary.
What tends to happen in the UAE is that the bank buys the property in the first instance, and then the buyer purchases it from the bank at a slightly increased price (to make up for there being no interest payable). This doesn't mean that the buyer has to find all the cash upfront; the buyer still pays in instalments, but deposits for houses under the Sharia system tend to be higher than most Western deposits. Thirty per cent is a typical amount to pay as the deposit. Foreign nationals using non-Islamic banks should expect to pay this amount too.
Once you have the financial side sorted out, it's time to move forward with the purchase process. See our page on buying property in Dubai for more information that will help you.
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