Looking forward to owing your very own home in the UAE? If you’ve been sitting on the fence for far too long, we’ve got some good news for you. Banks are now offering some of the most attractive interest rates and deals on mortgages in the UAE.

Souqalmal explores how the home finance market in the country is shaping up right now. And here’s all you need to know…

Is this a good time to get a home loan?

Interest rates for most mortgage products in the UAE are based on the 3-month EIBOR. According to UAE Central Bank data, the 3-month EIBOR has gone down from 2.15% at the beginning of 2020, to 0.375 percent today, dropping by more than 80%.

This spells good news for mortgage borrowers. We’re currently seeing banks offering attractive fixed-interest rate options for anywhere from 1 to 5 years. For instance, interest rates currently range from 2.7% to 3% p.a. fixed for a 3-year tenure.

The last time we witnessed such low interest rates on mortgages was back in 2015. Apart from lower interest rates, we’re also seeing lucrative deals such as inclusion of broker fees and land department fees within the finance amount, as well as discounts on processing fees and valuation fees.

What’s the latest down-payment requirement?

With the launch of COVID-19 financial relief measures in early 2020, UAE banks had lowered the mortgage down-payment requirement for residents by 5%. First-time property buyers (Expats) needed to put down a deposit of 20% of the value of the property being purchased. This down-payment requirement was set at 15% for UAE Nationals.

However, many banks have now reverted back to the original 25% down-payment requirement for expats and 20% for UAE Nationals. So do check with your banks to see what reliefs are still available and which ones were only temporary.

Are more UAE residents looking for home finance currently?

The number of visitors to Souqalmal’s Home Loans section in the last quarter of 2020/beginning of 2021 has gone up by nearly 80 percent, compared to the previous quarter.

This spike in the number of people researching and applying for home loans on our platform is indicative of improved sentiment in the UAE property market, and a pick-up in mortgage demand in the last few months.

Another aspect to consider is due to global restrictions, the UAE has been attracting many foreigners to come and establish their companies and residency in the Middle East. The property market in the last few months has boomed with the increase in demand.

What if I need a personal loan to fund my down-payment? Is it easy to get such a loan right now?

Banks in the UAE have become more cautious when it comes to unsecured lending, specifically in the realm of personal loans.

With the wave of redundancies, unpaid leave allotments and pay cuts, many UAE residents were seen making a beeline for COVID-related debt relief options. Although banks had launched various support measures for borrowers in collaboration with the UAE government, such as loan deferrals as well as waiver of interest and various bank fees, in many cases loan and credit card default was inevitable.

Given these circumstances, banks have understandably tightened their lending criteria at the moment. As a result potential borrowers may find it more challenging to qualify for personal loans.

To increase your chances of qualifying for a personal loan, make sure your Debt-to-Income ratio is low and credit score in good shape.

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