Financial Institutions Enthusiastically Support Prospective Homebuyers in the UAE with Mortgage Solutions

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First Salary Credit Accepted as Valid Proof by UAE Banks – Will Others Follow Suit?

Dubai: Are you a newcomer to the UAE with dreams of owning a home instead of renting? UAE banks are gradually recognizing the potential of these new residents to expand their mortgage portfolios.

“New residents see the UAE as their new home and would rather invest in buying a property than renting,” explained a banker. “Not only that, but they also want to enter the real estate market as soon as possible.” While some prefer cash transactions, many individuals require a mortgage to finance their property purchase. Banks are now striving to facilitate this process.

According to market sources, loans are being granted when clients present their first salary credit information. This is a departure from the previous requirement of six months’ worth of salary records for newcomers to secure a loan in the UAE. However, Michael Hunter, CEO of Holo, points out that one salary credit is “still not the norm.”

“Newcomers looking to buy property in the UAE cannot mortgage a home through an international bank, and some local lenders still require up to six months’ worth of salary credits shown in their UAE accounts,” Hunter explains. “For business owners, this can be even more challenging as they often need to demonstrate two years of trading.”

To address these challenges, lenders are introducing programs such as the first salary credit detail. Banks recognize that by maintaining strict loan requirements for new residents, they risk missing out on potential opportunities.

Developers Offering Support Dubai developers are also stepping in to meet the needs of new residents by offering low down payment options. However, most major developers still follow construction-linked payment structures, which may pose difficulties for young professionals starting their careers in the UAE. Developers acknowledge the shifting buyer demographics, with a younger audience in their late 20s and early 30s seeking immediate property ownership rather than waiting.

Will Banks Increase Loan-to-Value Ratios? Granting larger loans compared to property values for new residents who aspire to become homeowners may pose challenges for banks, despite their efforts to be accommodating. It is important to note that the available options for immigrants are not significantly improving, according to Hunter. Only a few banks continue to offer better possibilities.

Mortgage Rates on the Rise Major banks are set to release their first-half 2023 results in the coming weeks, and these figures are expected to demonstrate increased mortgage approvals. Despite the previous decline in the fourth quarter of 2022 due to rising interest rates, end-user demand for property purchases in Dubai and the UAE remains strong. It appears that UAE home buyers have effectively adapted to the higher EMIs (Equated Monthly Installments) required, as they prioritize property ownership over renting. To further expand the pool of potential buyers by including recently settled individuals in the UAE, banks will need to make minor adjustments to their lending procedures.

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