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How to get a loan in the UAE

How to get a loan in the UAE - Makebiz

The United Arab Emirates attracts many foreign citizens who seek not only to work and live in this country, but also to invest in real estate or develop their own business. One of the key aspects of financial stability that is of interest to both locals and foreigners is the possibility of lending. To use it, it is important to understand the local conditions and requirements of banks. 

Loans in Dubai are available for citizens of the country and for foreigners with a resident visa. Most of the major banks are actively applying for mortgages and credit cards. However, in order to receive funds, the borrower must meet several key criteria:

  • At least 21 years of age.
  • You must have a valid resident visa.
  • The bank requires proof of stable income, which must be sufficient to pay off the debt.
  • A good credit history is a prerequisite. A rating of more than 580 points is usually required.

Different types of loans have their own requirements and rates, which vary depending on the type of loan and the borrower’s profile. The following options are available in the UAE:

— Consumer — designed for personal needs. The rates are fixed from 6% to 12% per annum.

— Car loans — for car purchases. The rate ranges from approximately 2.69% to 5% per annum.

— Mortgage loans — for the purchase of real estate. Rates start from 4.25–6% per annum. 

— Credit cards — for everyday expenses. More often, the rate is up to 4% per month.

It is important to keep in mind that the minimum income level for obtaining a credit card is 60 thousand rubles. AED per year. Otherwise, the bank often requires a deposit of the same amount as collateral to secure the loan. It is also worth considering the limit on the amount of monthly payments. According to the rules, the amount of all monthly payments on obligations cannot exceed 50% of the borrower’s total income. This rule is aimed at preventing excessive debt and protecting against financial difficulties.

The process of issuing a loan in the Emirates includes several stages:

1. Analyze different banks and their offers. There are many fins in the region. institutions where conditions vary significantly. It is recommended to study the offers of several banks, paying attention to interest rates, loan terms and additional fees.

2. Prepare the necessary documents. Among them are a passport, a resident’s visa, a certificate of income, bank statements for the last six months, an Ejari for housing, an employment contract, etc. If the loan is issued for a business, you may also need a business license, audited financial statements, and confirmation of account turnover. All this is necessary to confirm the legality of the company, demonstrate its financial condition and assess income stability. 

Some banks request a check for the loan amount, which serves as a refund guarantee.

3. Fill out the application at the selected bank. This can often be done online or at a branch. It is important to fill out the questionnaire carefully and provide all the requested data, as this speeds up the review process.

4. The financial institution evaluates the borrower’s solvency, including checking the credit history and analyzing the submitted documents. If all the conditions meet the requirements, the application can be approved. 

5. If your application is approved, you will be asked to sign a contract. Carefully study the content and requirements, preferably together with a consultant.

After signing, the approved amount will be credited to the client’s account. Most often, payments are automatically debited from this account on a monthly basis, simplifying the repayment process.

Foreign citizens without a registered business or proof of turnover often face refusals. Then banks can offer alternative options:

  • Deposit security — you can make a deposit that serves as a guarantee of payment.
  • Lower limit — banks can offer loans with a limited amount.

For Russian citizens living in the Emirates, the process is practically the same. Key requirements include:

— Work for a local company. This is confirmed by the employment contract and income certificates. 

— Business registration. If you own a business in the UAE, you must provide documents confirming its registration and financial stability.

— Credit history. The bank checks the client’s history through the Emirates Credit Bureau. Having a good story increases the chances of getting approved.

For Russian citizens considering buying real estate in Dubai, there are separate conditions, especially when it comes to purchasing an object using mortgage loans. Banks in the UAE are quite loyal to foreign buyers, but they impose a number of mandatory requirements to reduce financial risks.

In particular, for non-residents, it is usually necessary to make an initial payment in the amount of 20% to 30% of the value of the selected object. The exact percentage depends on the bank, the type of property and the financial profile of the client. In addition, the applicant will need to confirm their solvency. For this, income documents are provided, as well as bank statements from the country of permanent residence for a certain period.

Additionally, financial institutions can initiate an independent valuation of real estate. This is necessary to determine its real market value and minimize the risks when issuing a loan. In some cases, the bank may also request an extended package of documents, including credit history or proof of employment. After the mortgage is approved, the transaction is registered with the land Department, which officially establishes ownership of the housing.

When applying for a loan in the Emirates, it is worth considering the currency risk. Most of the loans are denominated in dirhams, while expats who make profits in another currency face fluctuations in transfers. And this, in turn, affects the amount of monthly payments and the total amount owed.

Obtaining a loan in the UAE is a real opportunity for those who wish to improve their well—being, purchase real estate or develop a business. However, the process itself requires a careful approach and understanding of local peculiarities. It is worth making sure of the stability of income, carefully approach the choice of the bank and the terms of lending, in order to avoid possible financial risks in the future.

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