What Is Mortgage? A Complete Beginner’s Guide for UAE Homebuyers

If you’re thinking of buying property in the UAE, one of the first questions that may come to mind is: what is mortgage?

You may have heard terms like “mortgagee” and “mortgagor” being used — especially by banks and brokers — but not fully understood what they mean. Don’t worry! In this simple guide, we’ll explain everything in plain English — and specifically for the UAE market.

Whether you’re a first-time buyer or just looking to learn more, this guide will break it all down for you.

 

 

What Is Mortgage in Simple Words?

A mortgage is a loan you take from a bank or lender to buy property. You repay the loan in monthly installments over a fixed number of years (usually 15 to 25 years). The bank charges you interest on the amount you borrow.

 Example:

Let’s say you want to buy an apartment in Dubai worth AED 1 million:

-You pay a down payment of AED 200,000 (20%)

 

-The bank gives you a mortgage for the remaining AED 800,000

 

-You repay the bank monthly with interest

 

Until the loan is fully paid off, the bank keeps a legal claim on the property. This gives them the right to take it back if you stop paying — this is called repossession or foreclosure.

 

What Is Mortgage in the UAE?

In the UAE, mortgages work similarly to other countries, but with some specific rules:

Criteria	UAE Mortgage Market Rules (2025)
Max Loan-to-Value (LTV)	Up to 80% for residents, 75% for non-residents
Minimum Down Payment	15–25% depending on buyer type
Interest Rate Types	Fixed, variable, or hybrid
Mortgage Term	Up to 25 years
Age Limit	Must repay before age 70 (salaried) or 75 (self-employed)
Life Insurance	Mandatory with every mortgage

So, what is mortgage in the UAE? It’s your gateway to homeownership — but with specific rules that a trusted broker can help you navigate.

Who Is the Mortgagee and Mortgagor?

Let’s clear up the common confusion between these two terms:

-Mortgagor = The borrower (you, the buyer)

-Mortgagee = The lender (usually a bank)

 

 In simple terms:

You (the mortgagor) borrow money from the bank (the mortgagee) to buy a home. You agree to repay it over time, and the property serves as security for the loan.

 Tip: The bank is called a “mortgagee” because they are giving the mortgage.

Types of Mortgages in the UAE

There are several types of home loans in the UAE. Choosing the right one depends on your financial situation and goals.

 1. Fixed-Rate Mortgage

-Interest rate stays the same for 1–5 years

-Good for budgeting

-Usually slightly higher initial rate

 

 2. Variable-Rate Mortgage

-Rate changes based on EIBOR (Emirates Interbank Offered Rate)

-Risk of increase, but may save money if rates go down

 

 3. Offset Mortgage

-Link your mortgage to your savings account

–Reduces interest if you keep more cash in the bank

 

 4. Islamic Mortgage (Ijara)

-Sharia-compliant (no interest)
-Bank buys the property and leases it to you
-Monthly payments include rent + profit margin

How Does a Mortgage Work in the UAE?

Let’s walk through the basic steps of how a mortgage works:

1. Find a Property
   

   Choose a property within your budget and pay a booking deposit.
   

2. Apply for a Pre-Approval
   

   This shows how much the bank is willing to lend based on your income and credit.
   

3. Bank Valuation
   

   The bank checks if the price you’re paying is fair.
   

4. Loan Offer
   

   You receive a formal loan offer with interest rates and terms.
   

5. Mortgage Registration
   

   Pay the mortgage registration fee (0.25% of loan amount in Dubai or 0.1% in Abu Dhabi).
   

6. Final Payment & Move-In
   

   Once registered, the bank pays the seller, and you become the official owner!
   

What Is Mortgage Eligibility in the UAE?

Not everyone qualifies for a mortgage. Here’s what banks usually require:

-Stable income (minimum AED 15,000 per month recommended)

 

-Good credit history

 

-Down payment ready (15–25% of the property price)

 

-Valid residency visa (for residents)

 

-Age below 70–75 at loan maturity

 

Mortgage Finder can help you understand your eligibility with a quick pre-assessment — no commitment required.

Costs Associated with Getting a Mortgage

Besides the loan amount, be ready for additional costs:

Fee	Typical Amount
Mortgage Registration Fee	0.25% of loan (Dubai) / 0.1% (Abu Dhabi)
Bank Processing Fee	0.5–1% of loan amount
Property Valuation Fee	AED 2,500–3,500
Life Insurance	Varies by age, loan amount
Early Settlement Fee	Up to 1% of remaining loan balance

These fees are part of the full cost of owning a home, so it’s important to budget accordingly.

FAQs – What Is Mortgage and How Does It Work in the UAE?

Q: What is mortgage used for?

It’s used to help you buy a property when you don’t want to pay the full price upfront.

Q: Can expats get a mortgage in the UAE?

Yes! Most banks lend to expats. Maximum loan amount is usually 75–80% of the property price.

Q: How long can I get a mortgage for?

Terms range from 5 to 25 years depending on your income and age.

Q: What is mortgage pre-approval?

It’s a letter from the bank confirming the loan amount you qualify for — great for setting your budget.

 

Now you know the answer to what is mortgage — it’s the tool that can help you afford your dream home in the UAE. With the right type of mortgage, lender, and plan, homeownership is within reach for many residents and expats.

The process can feel overwhelming at first — but that’s why we’re here. At Mortgage Finder, we make it easier by guiding you through every step.

Want expert help finding the right mortgage?
Speak to our advisors today and get a free pre-approval within 24 hours — no guesswork, no stress