March 14, 2017
The amount you can borrow for your home loan will be based on your annual income, your existing debts, your employment status, current interest rates, your personal circumstances and on the value of the property you are buying.
Ultimately, the mortgage amount will come down to what the bank thinks is a sensible amount to lend to you and what you can afford.
For self employed applicants, the bank, in general will want to see 2 years of audited financials before approving your mortgage application. How much you draw as a salary and what profit is generated from the business will be considered.
Each bank in the UAE has a different formula to calculate how much they will lend to an individual customer. Some will use 7x your annual salary. Some will use 70x your monthly salary. Some will take bonuses and commission into account when calculating your borrowing capacity. Others will not. Some will use the current interest rate as the basis of their calculations to determine whether you are eligible, others will load the current interest rate by 1% to 2% to allow for future interest rate fluctuations.
As a general rule of thumb your monthly salary needs to be at least 4x higher than the monthly mortgage payment. But the amount you wish to borrow and what types of persons vary from bank to bank. Exceptions can be made for solid applicants and particular properties.
For someone earning AED25,000 per month, different lending policies across different banks can mean the difference AED300K on your pre-approved limit; or whether or not you can get approved at all!
UAE Central Bank regulations stipulate a maximum loan term of 25 years or up to the age of 65 for a salaried individuals or 70 for self-employed.
A professional mortgage advisor can help you through the myriad of different mortgage products and different bank policies.
We’ve helped hundreds of families secure their UAE dream home. Most of them referred to us by happy clients. We are here to help you too.