Home Loans and Personal Finance In The UAE

| September 4, 2012
Home Loans and Personal Finance In The UAE

Home Loans and Personal Finance In The UAE

Dubai and Abu Dhabi are two of the fastest growing cities in the world, with the property prices to match. While badly affected by the global property price crash, the UAE is back on its feet and an excellent place for expats to live – in fact, 87 per cent of all those living in the UAE are foreigners.

Moving abroad can be a complicated affair, and you may wish to use a relocation consultant to help. Visas, money and accommodation should be your first considerations – using an international bank like HSBC is highly recommended to ensure you find your feet financially and can compete in the cut-throat property market.

The UAE’s Property Market

The property market in Dubai and the UAE is buzzing – in the first half of 2012, foreigners and expats spent $5.9bn (AED22bn) on homes and property in the city, and Gulf News reports that 2011 Q4 home sales increased in value by an amazing 67 per cent. Second homes are particularly popular amongst expats and are driving the recovery of the country’s mortgage and lending industry.

Property prices and the cost of living are similar to the UK, although residents pay no personal taxes and no property taxes. HSBC offers a home loan calculator online for those considering moving abroad or investing in property in the UAE.

Developer property purchases are called “off-plan”, whereas “resale” means a purchase from a private seller. Some off-plan purchases can require proof that buyers have been pre-approved for home loans, and may require a 20 per cent deposit up front, so set up an appointment with your bank before approaching any sellers.

Home Loans: International vs. Local Banks

Picking a bank is one of the first, and most important, things to do when moving abroad. The UAE has a thriving local banking scene, but multi-national banks are a safer choice for expats.

The Emirates Interbank Offer Rate (EIBOR) is competitive and falling, but many Emirati banks recently refused to adjust their rates because they felt the six month rate of 1.5375 per cent would harm their business – some existing customers are stuck with rates of 6 to 8 per cent, and slapped with huge termination charges when they try to switch banks, while new applicants are offered 4 per cent.

Most multinational banks allow customers to choose between the EIBOR (benchmarked to the three months’ EIBOR with a quarterly rate review) or a variable rate home loan. This makes large international banks a much safer place for your mortgage.

Additionally, Arabian Business reports that local banks in the UAE may be reluctant to lend to Western expats after the high-profile case of a British woman who skipped out on a mortgage in Abu Dhabi. She fled back to the UK, and magistrates threw out an extradition request to face cheque fraud charges – some experts expect to see banks in the UAE tighten controls or demand power of attorney from foreign nationals in the wake of the scandal.

Once you’ve obtained your visas, set up a bank account and found the perfect property, obtaining a home loan should be a relatively painless affair in the UAE – and once you have moved in, you can enjoy your tax-free earnings and investments in the sunshine in this beguiling modern nation.


Home Loans and Personal Finance In The UAE

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Category: Finances, Loans

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