Dubai Property Purchases: Understanding Mortgage Financing Rules and the Reality of ‘100% Property Loans’

Dubai’s booming property market often tempts buyers with promises of easy financing, including claims of “100 per cent property loans.” However, potential purchasers should understand that not all financing offers are legally permissible under UAE regulations, and a careful review of the rules can prevent costly misunderstandings.

 

Under the Central Bank of the UAE (CBUAE) mortgage regulations, banks and financial institutions are required to ensure a minimum buyer contribution when providing mortgage finance. Article 3 of the Central Bank’s Mortgage Loans Notice (No. 226/2013) sets out clear limits on loan-to-value (LTV) ratios, depending on the buyer’s status and the type of property.

 

For UAE nationals, first-time owner-occupiers can finance up to 85 per cent of a property valued at Dh5 million or below, and up to 75 per cent for properties above Dh5 million. Any subsequent property, whether a second home or an investment, is limited to 65 per cent financing, regardless of property value.

 

Expatriates face slightly stricter limits: first-time buyers may obtain mortgages for up to 80 per cent of a property valued at less than Dh5 million and 70 per cent for properties above that threshold. Second or additional properties are capped at 60 per cent of the value.

 

Properties purchased off-plan, which involve longer development timelines and higher risks, are treated differently. Across all categories, the maximum LTV for off-plan mortgages is set at 50 per cent, regardless of buyer status or property value.

 

This means that claims of “100 per cent financing through a bank mortgage” are generally not legally valid, as a mandatory contribution from the buyer is required under Central Bank rules.

 

However, buyers may still encounter offers of full financing through developer payment plans. In such cases, the buyer makes instalments directly to the developer over the construction period, rather than borrowing from a bank. These plans, commonly offered for off-plan properties, fall outside the scope of Central Bank mortgage regulations but come with their own considerations.

 

Buyers opting for developer financing should carefully review the payment schedule, handover terms, and any hidden finance charges before committing. While 100 per cent developer financing is legally possible, exercising due diligence remains crucial to avoid unexpected costs or delays.

 

In summary, Dubai property buyers should distinguish between bank mortgages, where partial financing is mandatory, and developer-led payment plans, which may offer more flexible terms. Understanding the regulatory framework helps ensure that a dream property investment does not turn into a financial trap.

 

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