How can UAE expats finance a property purchase in Abu Dhabi?

Buying property in Abu Dhabi is an exciting step, whether you are seeking a family home, an investment, or a new base in the capital. For non-UAE nationals, understanding the financing process is key to ensuring a smooth and successful purchase. The following guide outlines the essentials of financing a property in Abu Dhabi, helping you navigate the process with confidence.

Abu Dhabi Law No. 19 of 2005 introduced the concept of Investment Areas, which allow non-Emiratis to own property in designated parts of the city. This was a major step in opening the real estate market to international buyers. But financing property as an expatriate involves specific rules and procedures that should be carefully considered before you begin your search.

Secure Finance

One of the most important first steps is to look into your financing options as soon as you seriously consider purchasing. Understanding what you can borrow helps define your budget. It avoids the disappointment of falling in love with a villa on Saadiyat Island, for example, only to realize that your approved finance will stretch to something more modest. In Abu Dhabi, mortgage finance is available through a variety of banks, and it’s always helpful to consult a mortgage broker who can guide you toward the best deal for your circumstances.

Pre-approval, or approval in principle, is the first formal step in securing finance. This is when a bank agrees to lend you up to a certain amount, subject to conditions. It gives you clarity on your budget and strengthens your position when negotiating a purchase. Pre-approval is typically valid for a set period, so it is important to keep an eye on expiry dates to avoid unnecessary delays.

Meet equity requirements

Expatriates buying property in Abu Dhabi must meet equity requirements set by the UAE Central Bank. First-time buyers need at least 20 per cent equity for properties under AED 5 million, and at least 30 percent for properties above this price point. For a second property, the required equity increases to 40 percent. Banks may lend up to seven times your annual salary, but they will assess your existing debts, including loans and credit cards. Generally, your total debt payments should not exceed 50 percent of your monthly income, although most banks prefer this figure to be closer to 35 percent. The maximum mortgage term is 25 years, and you must be under 65 at the time of the final repayment, or 70 if you are self-employed.

Line up your documents

Documentation is another key consideration. Banks offering mortgages typically ask for your passport, visa, Emirates ID, salary certificate, recent payslips, six months of bank statements, credit card statements, and sometimes proof of address. For those new to the UAE, the requirement for six months of statements can present a challenge, though some banks are more flexible, especially if you work for the government or a large corporation.

Both conventional and Islamic mortgages are available in Abu Dhabi. Islamic finance is structured differently, often as an Ijara agreement where the bank buys the property and leases it to you. This option functions similarly to a conventional mortgage from a buyer’s perspective and is available to non-Muslims as well. Some developments may stipulate the use of Islamic finance, so it is worth checking before you proceed.

Budget for additional costs

Alongside your deposit, you should budget for additional costs of around five percent of the purchase price. These cover fees such as mortgage application, processing and registration fees, property valuation, and insurance. Life insurance is a requirement of most mortgages and can take several weeks to arrange. Shopping around can save you money, as mortgage providers’ insurance offers are not always the most competitive. Building insurance, however, tends to be similarly priced across providers.

Get an official valuation

Once you have found that perfect property and agreed on a price, the bank will instruct an independent valuer to assess the property’s worth. This protects both you and the bank from overpaying. If the valuation is in line with the price, the bank will issue a formal loan offer. Where the property already has a mortgage, the seller’s bank will provide a liability letter stating the outstanding loan amount. The buyer’s bank pays this off so the title deed can be released and a No Objection Certificate (NOC) issued by the developer. This confirms that community fees are paid and that the developer has no objection to the sale. Only when these steps are complete can the transfer take place.

Attend the transfer

At transfer, the buyer pays their portion of the price by manager’s cheque (a banker’s draft), while the bank provides a cheque for the mortgage portion. All parties must attend the transfer or appoint someone with power of attorney to act on their behalf. If both the buyer and seller are using finance, the process can take up to 60 days from signing the initial agreement. Where only one party has finance, allow around 45 days. For cash transactions with no finance involved, the process is often completed within two weeks.

And there’s more…

There are a few additional points to consider. Some UAE banks charge early repayment fees, so check these terms before you sign. This applies whether you are making an early lump-sum payment or selling the property before the mortgage term ends. Also, if you have assets overseas, you may wish to explore using equity from a property in another country to finance your Abu Dhabi purchase. Many buyers do this to take advantage of favorable interest rates or borrowing conditions abroad.

Financing a property purchase may feel complex at first glance, but with proper preparation, the process is manageable. Early planning, realistic budgeting, and sound advice are key to a successful outcome. And whether you are buying your first home or expanding your property portfolio, understanding the steps and requirements involved will help ensure a smooth transaction and peace of mind.

Ben Crompton is a managing partner at Crompton Partners, a leading real estate firm in Abu Dhabi.