# Mortgage rates in Dubai



## clickonline (Sep 18, 2008)

Since it looks like the property prices are falling or would fall, I started thinking if it would be a good idea to buy a place instead of renting. My logic is this -- if i am paying 200k in rent for a 2BR apartment and I can buy a 2BR for ~1.6M AED, as long as the price doesnt fall by more than that amount in a year, I should break even or do better. I am going to be losing the 200k anyways if i rent. It is a classic rent vs buy dilemna... 

Now what I dont know is what the interest rates are in Dubai for mortgages and how strict the lending has become. The merger of Amlak and Tamweel would definitely have an impact but for someone with ~45k AED as monthly income, should financing be a problem? Can we still have a 10-20% down payment and finance the rest or those days are over? I was hoping the very intelligent people on the forum who are in Dubai would be able to help. 

I dont move to Dubai until June so I still have time to see how the situation shapes up.


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## clickonline (Sep 18, 2008)

Since the post was getting digged deeper in the archives, i thought to bring it up to the forum again to see if anyone can offer some advice.

Thanks


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## DesertStranded (Oct 9, 2008)

If you want to buy or rent it is best to wait til after the new year as prices are expected to fall further then. But keep in mind it is harder and harder to be approved for a loan to pay a years rent or take out a mortgage. The banks are faltering here too so if you don't have a good salary then you might not be approved for a loan to take advantage of the falling prices.


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## flossie (Jun 9, 2008)

And interest rates here have gone up, up , up. As opposed to Australia where they are (blissfully!!) dropping.


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## Elphaba (Jan 24, 2008)

Lenders have become much stricter regarding criteria and loan to values have fallen, You would need a deposit of at least 20%, if not more depending on the development.

It is best to deal with a broker, particularly in a difficult market, and although I rarely handle mortgages I have staff that do so on a daily basis. 

-


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## ralphrau (Dec 6, 2008)

*Rent or Buy in Dubai*

Dubai remains an oasis in a turbulent region. Around 2.5 billion people live within a 2.5 hour flying radius. For these 2.5 billion Dubai promises everything they lack. Clean and safe city, modern infrastructure, uninterrupted water and electricity, policemen that need not be bribed, ultra cheap gas etc etc

There are excellent bargains to be had and for someone earning over AED 20k per month it should be possible to get a mortgage. Distress sales are available today @ AED 1,000 per sq foot. Rentals are about AED 88 per sq foot. Interest rates are around 3.5% over interbank rate. This means around 8.25% currently.


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## clickonline (Sep 18, 2008)

Thanks for your response. It is encouraging that mortgages are available . Is 8.25% been the normal run rate for mortgages over the past couple of years? I would imagine the interest rates to be lower worldwide than they were 3-24 months ago. My biggest concern is the downpayment required? Is it still possible with a good income to a buy a place with 20% or so down or is it nearly impossible?


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## flossie (Jun 9, 2008)

ralphrau said:


> Dubai remains an oasis in a turbulent region. Around 2.5 billion people live within a 2.5 hour flying radius. For these 2.5 billion Dubai promises everything they lack. Clean and safe city, modern infrastructure, uninterrupted water and electricity, policemen that need not be bribed, ultra cheap gas etc etc
> 
> There are excellent bargains to be had and for someone earning over AED 20k per month it should be possible to get a mortgage. Distress sales are available today @ AED 1,000 per sq foot. Rentals are about AED 88 per sq foot. Interest rates are around 3.5% over interbank rate. This means around 8.25% currently.



Are you an agent, by chance?

Clickonline, interest rates have been going up here!


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## clickonline (Sep 18, 2008)

ralphrau does sound like an agent.......but if an agent can help answer some of the questions, its great  (as long as there is no aggressive soliciting)


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## ralphrau (Dec 6, 2008)

flossie said:


> Are you an agent, by chance?
> 
> Clickonline, interest rates have been going up here!


Am not an agent. Is your real name Flossie by chance ?

Regards, Ralph


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## ralphrau (Dec 6, 2008)

clickonline said:


> Thanks for your response. It is encouraging that mortgages are available . Is 8.25% been the normal run rate for mortgages over the past couple of years? I would imagine the interest rates to be lower worldwide than they were 3-24 months ago. My biggest concern is the downpayment required? Is it still possible with a good income to a buy a place with 20% or so down or is it nearly impossible?


In 2006-07 rates did decline to 6.50 %on completed properties from reputed developers (Lloyds bank offered 6.5% on a development of Union Properties) .
3.5% margin over the 6 month interbank benchmark rate is the norm for most banks.

Unfortunately for borrowers the UAE Central Bank is charging local banks between 6-8% under their emergency medium term deposit funding program. Assuming this is a transitional funding issue rates should eventually decline to 4.00 + 3.5 = 7.5%

Personally I use 8% in my long term investment evaluations.

Given the current global environment local banks are more comfortable with a 30% down-payment. For some reason 30% is the standardised downside risk to property valuations in most parts of the world ?

Rule of thumb: The higher your down-payment the wider your choice in todays market. 

Take your time choosing. Good deals should contnue in Q1-Q2 2009.


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