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 a mortgage? You may have heard terms like “mortgagee” and “mortgagor” thrown around by banks and brokers but not fully understood what they mean.
Don’t worry! This comprehensive guide explains mortgages in plain English tailored specifically for the UAE real estate market. Whether you’re a first time buyer or simply want to understand how home loans work, this article breaks it all down step by step.
What Is a Mortgage in Simple Words?
A mortgage is a loan you take from a bank or lender to buy property. You agree to repay this loan through monthly installments over a set number of years (usually between 15 and 25). The bank charges you interest on the borrowed amount.
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 lends you AED 800,000 as a mortgage
- You repay the bank monthly with interest
Until you pay off the entire loan, the bank holds a legal claim on the property. If you stop making payments, the bank has the right to repossess the property, a process known as foreclosure.
How Do Mortgages Work in the UAE?
Mortgages in the UAE function similarly to those in other countries, but there are specific regulations to follow:
| 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 |
Mortgagee vs Mortgagor: Know the Difference
These two terms often confuse first time buyers:
- Mortgagor = You, the borrower / property buyer
- Mortgagee = The bank or lender
You (the mortgagor) borrow money from the bank (the mortgagee) to purchase your property. The property itself serves as collateral until the loan is fully paid.
Types of Mortgages Available in the UAE
The UAE offers a variety of home loan options to suit different needs. Choosing the right type depends on your income stability, investment goals, and risk tolerance.
1. Fixed Rate Mortgage
- Interest rate remains constant for a set period (usually 1–5 years)
- Excellent for budgeting and predictability
- Usually starts with a slightly higher initial rate
2. Variable Rate Mortgage
- Interest rate fluctuates based on the EIBOR (Emirates Interbank Offered Rate)
- Can increase or decrease over time
- Good if you expect rates to drop but carries some risk
3. Offset Mortgage
- Links your mortgage to your savings account
- The more savings you keep, the less interest you pay
- Offers flexibility but may involve extra fees
4. Islamic Mortgage (Ijara)
- Sharia compliant (no interest)
- The bank buys the property and leases it to you
- Your payments include rent + profit margin rather than interest
Step by Step: How to Get a Mortgage in the UAE
Here’s a quick roadmap for UAE homebuyers:
- Find Your Property
Choose a property within your budget and pay a booking deposit. - Get Pre Approval
The bank assesses your income and credit to determine how much they can lend. - Bank Valuation
The bank checks the property’s fair market value. - Receive Loan Offer
You’ll get a formal loan offer with the interest rate, term, and conditions. - Register the Mortgage
Pay the mortgage registration fee 0.25% of the loan amount in Dubai or 0.1% in Abu Dhabi. - Final Payment & Move In
Once the mortgage is registered, the bank transfers the money to the seller and you become the official owner.
UAE Mortgage Eligibility Criteria (2025)
Not everyone qualifies for a mortgage. Here’s what most UAE banks look for:
- Stable income (minimum AED 15,000/month recommended)
- Good credit history
- Down payment ready (15–25%)
- Valid UAE residency (for residents)
- Age below 70–75 at the end of loan term
Additional Costs to Consider When Getting a Mortgage
Apart from your down payment and EMIs, there are several one time and recurring fees involved:
| Fee Type | Typical Amount |
| Mortgage Registration | 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 | Depends on age and loan amount |
| Early Settlement Fee | Up to 1% of remaining loan balance |
Detailed Overview on Different Types of Mortgages in Dubai
Dubai’s mortgage market offers specialized products for different buyer profiles. Let’s break them down:
Fixed Rate Mortgage
The interest rate is set before the loan starts and stays the same for the agreed period. Great for predictable planning, especially in rising interest rate environments.
Variable Rate Mortgage
The rate changes with market conditions. This includes discounted and capped options, where you might enjoy temporary lower rates or capped increases.
Remortgage
You can switch your existing mortgage to a new one (with the same or different bank) to lower your rate or extend the term.
Offset Mortgage
Link multiple accounts to your mortgage. The more money you keep in linked accounts, the less interest you pay.
Investment Mortgage
Ideal for buying rental properties. It generates income through rent or resale.
Non Resident Mortgage
Available for eligible foreigners. Usually requires a higher down payment and offers shorter terms.
Mortgage by Property Type
Mortgages are also categorized by what type of property you’re buying:
- Residential Mortgage → For homes you will live in
- Commercial Mortgage → For businesses purchasing property
- Land/Construction Mortgage → For buying land or building property in stages
Mortgage Repayment Options
Banks in the UAE offer different repayment structures:
-
Interest Only Repayments
- You pay only the interest for a set period (usually up to 5 years)
- Common with off plan properties
-
Capital + Interest Repayments
- The standard option monthly payments cover both interest and principal
- Over time, more of your payment goes toward the principal
Down Payments: Typically, UAE expats must pay 20–35% upfront, depending on the property type and bank.
Mortgage Life Insurance
Mortgage life insurance protects both the borrower’s family and the lender. If the borrower passes away or becomes unable to work, the insurance covers the remaining loan, ensuring the property remains with the family.
Frequently Asked Questions (FAQs)
Can Expats Get a Mortgage in Dubai?
Yes, expats are eligible, though requirements and terms may differ from those for UAE nationals.
How Long Does Mortgage Approval Take?
On average, 2 to 6 weeks, including documentation, valuation, and bank approval.
How Much Down Payment Do I Need?
Expect to pay 15–25% of the property price upfront. Non residents often need to pay more.
Which Banks Offer Mortgage Loans?
Top banks include Emirates NBD, Emirates Islamic, Mashreq, and HSBC UAE.
What Is EMI?
Equated Monthly Installments (EMI) are fixed monthly payments you make to repay your loan, covering both principal and interest.
Final Thoughts
Buying a home in the UAE is exciting but navigating mortgages can be overwhelming at first. Understanding the types of mortgages, eligibility criteria, costs, and repayment options will empower you to make the right financial decision for your future.
Take time to compare offers, consult mortgage advisors, and always read the fine print. With proper planning, your dream UAE home can become a reality.