Property over Dh5m qualifies for only 60% loan

The Central Bank's mortgage rules mean that borrowers must put a sizeable down payment on their properties.

I want to buy a house in Dubai and read that I can borrow 75 per cent of the purchase price, but my bank says it will only lend me 60 per cent of what I will pay, even though I have plenty of income. Do the banks not have to comply with the legal limits in this country? RH, Dubai

The Central Bank of the UAE made changes to the mortgage lending limits in 2013 so that for expats, the maximum loan to value for the first property purchased will be limited to 75 per cent of the purchase price up to a valuation of Dh5 million. For a purchase price above this level, the maximum loan to value will be 60 per cent. For all second properties the maximum loan will be limited to 60 per cent, regardless of value. I understand that RH is looking to buy a villa with a purchase price of Dh5.2m so will be limited to borrowing 60 per cent of the price paid. I suggest speaking to a specialist mortgage broker to look at all the mortgage options, as the rates vary between lenders.

Keren Bobker is an independent financial adviser with Holborn Assets in Dubai, with over 20 years’ experience. Contact her at [e-mail]. Follow her on Twitter at @FinancialUAE.

The advice provided in our columns does not constitute legal advice and is provided for information only.

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