UAE Mortgage Lenders Ease Requirements for Offplan Property Buyers
Mortgage lenders in the UAE are revising their policies to provide mortgages to offplan property buyers at an earlier stage of construction. Previously, lenders would typically approve mortgages when a project reached 80% completion, but they are now willing to offer financing once the project crosses the 50% threshold. This change is expected to boost the property market by facilitating faster mortgage approvals for both residents and overseas buyers, particularly for properties valued below AED 5 million.
With Dubai’s property market relying heavily on offplan launches to meet demand, banks are recognizing the need to ensure ongoing funding availability. Despite multiple interest rate hikes by the US Federal Reserve and the UAE’s banking regulator, lenders are becoming more flexible in providing loan-to-value (LTV) funding. Currently, residents can obtain mortgages with an LTV ratio of 75% once the project surpasses 50% completion, while non-resident investors can secure funding of up to 50% of the property value.
The easing of requirements is particularly beneficial for first-time overseas buyers and new residents in the UAE who are interested in properties below AED 5 million and prefer developer financing support or mortgage options. As property prices continue to rise, higher down payments become necessary, making mortgage financing at the 50% completion stage advantageous. Developers typically aim to receive 50% of the property value during the construction and handover phase, and while some offer monthly installment schemes, additional upfront payments, such as registration charges and utility deposits, still apply.
Property market experts have lauded the more lenient lending norms adopted by banks for offplan purchases, with offplan sales accounting for over 50-55% of total sales in Dubai. Lowering the project completion requirement for mortgages is seen as a strategic move to sustain the ongoing property market boom, particularly benefiting buyers of properties valued between AED 1 million and AED 3 million who rely on mortgages to meet their financial commitments.
