Home Loan Procedure in UAE

How to take out a home loan? What are the steps that go into the house loan procedure in the UAE? Read on to find out the answers!

Getting a home loan is the first step towards owning your dream home, an office or beginning your real estate investment journey. Buying a property is an exciting process altogether, whether it is purchased upfront or financed by a lender. However, it can get very overwhelming and confusing if you are not ideally aware of all the steps that must be completed when purchasing a property via a home loan. Having said that, we will cover the complete process of applying for a home loan in UAE in this article. By the end of this post, you'll be able to complete this somewhat lengthy and crucial procedure swiftly and take the final step towards owning your chosen property. Let’s get started!

How to Get a Home Loan in the UAE?

Following are the complete steps involved in a house loan procedure:

1. In-Principle Approval

The very first step of getting a home is getting in-principle approval. In-principle approval can be seen as the preliminary approval for the loan you have requested. Since home processing involves multiple fees, it is essential to get in-principle approval before going ahead with the rest of the application process. Most banks offer instant, free in-principle approvals for home loans.

2. Application Form & Necessary Documents

The second step of the home loan process is filling out the loan application form and attaching all the required documents. The application form for most home loan procedures requires the following information:

• Your personal details (name, contact number, email ID, and so on)
• Your current address 
• Your educational background 
• Your employment details and annual income 
• The details of the property against which you're applying for a loan
• Estimated value and cost of property

Once you've filled out your loan application form, you'll need to attach some important documents for verification. These documents are as follows:

• ID proof 
• Address proof 
• Income proof 
• Age proof 
• Educational certificates
• Employment details 
• Property details and related documents for which you're getting the loan
• Bank statements, etc. 

3. Pay the Loan Processing Fees

Once the application form is completed and submitted, you need to pay the loan processing charges to the bank or the lender. Note that this fee is used for maintaining your loan account. Also, the processing charges vary from one lender to another and can range from 0.25 % to 0.50% of the loan amount you've requested.

Some banks or lenders offer zero processing fees as a promotional offer for their home loan products. While a zero processing or in-principle approval fee is a good offer for home loan borrowers, it can sometimes result in higher interest rates and additional charges in the long run. So, make sure that you have researched the product well before finalising everything.

4. Be Ready for One-To-One Interaction with the Bank

Once your home loan application has been submitted, you need to wait for around 2-3 working days for the bank to process your application and papers and revert. Some banks or lenders may ask you to visit their branches for a formal discussion over the same. This is usually done to make sure you're the right applicant and that you're capable of loan repayment. You can clear all your doubts regarding the interest rates, repayment tenure, etc. while having a one-on-one discussion with your potential lender.

5. Document Verification

Banks and other financial institutions receive millions of home loan applications on a day-to-day basis. To check which applicants are genuine, a document verification process is conducted. Any fake or improper document can stop you from getting loan approval. So, make sure all the documents are original and in order. A bank representative may visit your home to verify whether the address provided by you is correct.

Banks provide a pre-approval letter once your loan application-related documentation checks out. After that, you have 60-90 days (depending on the bank) to find a suitable property, get it evaluated and finalise the deal. If you have already found the property, you can go ahead with the evaluation.

6. Processing Property Documents and Conducting a Legal Check

After verifying the application-related documents, the bank then pays attention to the home or property you're planning to purchase with the help of this mortgage loan. Submit all the original documents of this property to the bank. These documents will be held by the bank until the entire loan amount is paid. This acts as a security deposit for the loan that has been granted to you.

Below are the details of the property required by the bank:

• Name and address of seller along with ID and address proofs
• Name and address of the property 
• A series of documents if the seller is not the actual owner 
• No Objection Certification (NOC) from the primary owner 
• NOC from the housing society

Once you submit all the original property papers to the bank along with the above-mentioned documents, the bank conducts a verification. This is known as a legal check. The bank's lawyer takes care of this process. 

7. Site Estimation and Technical Check

Financial institutions are very cautious when it comes to home loans and the property it is lending the amount for. For this reason, a technical check is performed followed by a site estimation. An inspector will run a property valuation check to determine whether the property you have chosen is worth financing. If not, the bank will ask you to choose a different property.

Usually, a site visit by the bank representative/inspector is conducted to check the following details:

• Stage of construction 
• Work progression 
• Quality of construction 
• Time required for complete construction 
• Whether the layout of the house is permitted by the government or not
• Environmental standards

In case you're purchasing an already constructed home, then the representative will take a look at the following information:

• Age of the building 
• External as well as internal property maintenance
• Construction quality 
• Approval plan and permissions of the building

A property evaluation fee is charged for home loans. Note that there is a separate fee that you need to pay for this technical check and site evaluation. This amount can be either demanded as an upfront cost or charged separately. If the first property you have chosen is not approved by the bank, you will be required to select a new property. The property evaluation fee will be payable every time you get a new property for evaluation.

8. Application Approval

This is perhaps the most crucial step of the home loan process. At this point, your application can be approved or rejected by the banks depending on certain factors. If the lender is not satisfied with your application or finds out problems with your documents, your loan application might get rejected. However, if everything is to the point, your loan application will be approved without any issues.

Once the bank approves your application, you'll be notified of the amount of loan that can be sanctioned to you for the loan. This step ends with a final sanction letter from the bank. This letter will contain all the terms, conditions, and policies of the home loan.

Home Loan Pre-Approval in UAE

9. Processing the Loan Sanction Letter

In most cases, the bank offer letter for home loans contains the following information:

• Sanctioned loan amount
• Rate of interest on which your loan is approved
• Fixed or variable interest rate
• Mode of loan repayment
• Tenure
• Terms & Conditions
• Acceptance Copy

Once you agree to the above-mentioned details and terms and conditions, you are asked to sign a duplicate copy of this loan offer letter for bank records. Here is an important point to note:

Before signing the offer letter, make sure to read it thoroughly. Also, make sure that the interest rate on the total loan amount is the same as discussed with you in the early stages. 

10. Final Deal 

Once the site estimation and evaluation are done, and all the application paperwork gets a green light, the next step is the final locking of the home loan deal. The bank's lawyer prepares the final documents and has them signed and stamped by all the involved parties.

11. Signing the Home Loan Agreement

This step takes you even closer to your dream of owning a home. You need to sign the agreement prepared by the bank. You'll need to submit post-dated cheques for the first 36 months of the loan tenure. After that, you'll need to hand over the original documents to the bank. This step is called Memorandum of Execution (MOE) and comes with a stamp duty which you need to pay. 

12. Home Loan Disbursal

Once all the paperwork is done and everything is legally clear, you'll receive a home loan amount via a cheque. You may need to submit a few essential documents to the bank before getting your loan amount. If you're planning to source more funds from outside, then you need to submit documented proof for the same as well.

Important Tips for Getting a Home Loan in UAE

Getting a home loan is a very crucial process. The following tips will help you glide through it smoothly:

• Compare different banks to select the one offering the lowest interest rates
• Read the eligibility criteria before applying for the loan
• Carry original documents at the time of face-to-face meeting with the bank
• Interest rates may be negotiable based on your credit profile and property value
• Read every loan-related document carefully before signing the deal

How to Get a Home Loan in UAE?

We have discussed all the steps that are involved in getting a home loan in the UAE. Make sure to read and understand every step and stick to them. You can also get simultaneous help from our representatives when you apply for your home loan via Policybazaar.ae, our official website. You can get in touch for the most affordable home loans at the lowest interest rates. Policybazaar.ae has the top home loan providers that offer the best mortgage loans to the residents of UAE. On top of it, our in-house experts help you get the best mortgage loan at the best interest rates. The home loan process is a rather simple process with Policybazaar.ae as your finance partner.

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