DEPOSIT AND COST STRUCTURE
One of the most important differences for non-resident buyers is the upfront capital requirement.
DEPOSIT REQUIREMENTS
- Typically 40%–50% of the property value
- Higher deposits may be required for certain property types
ADDITIONAL COSTS
In addition to the deposit, buyers should budget for:
- Dubai Land Department (DLD) fee: 4%
- Mortgage registration fee: 0.25%
- Bank arrangement fee: ~1%
- Valuation fee
- Agency fee (if applicable): ~2%
Overall, total upfront costs typically range between 45% and 55% of the property value when combining deposit and fees.
FINANCE RATES AND LOAN STRUCTURE
Interest rates for non-residents are generally:
- Slightly higher than resident rates
- Offered with fixed periods followed by variable rates
Typical structures include:
- Fixed rate for 1–3 years
- Reversion to variable rate linked to EIBOR
The difference in pricing reflects the additional risk and administrative complexity associated with non-resident lending.
EXIT STRATEGY AND FLEXIBILITY
Early repayment charges, refinancing options, and resale timelines all influence the effectiveness of a leveraged investment.
A poorly structured mortgage can limit flexibility at the point of exit.
LEVERAGE VS CASH DECISION
One of the most important considerations is whether to use leverage at all.
In many global markets, financing is essential to achieve acceptable returns. Dubai is different.
With rental yields often ranging between 6% and 8% (or higher in certain segments), the cost of borrowing can materially reduce net returns.
The decision should be based on:
- Cost of debt vs net yield
- Currency exposure
- Opportunity cost of capital
CURRENCY RISK
Non-resident borrowers earn income in foreign currencies but repay loans in AED.
As the AED is pegged to the US dollar, this introduces:
- USD exposure
- Potential volatility depending on home currency
Currency risk should be factored into long-term affordability.
