Home Loan Vs Loan Against Property in UAE

While both involve property, they serve different purposes. Home loans are designed to buy a home, while loans against property can be used for different purposes, including house purchasing.

If you are not sure how to take out a loan against your home and want to know the key differences between the two, read this article. In this article, we will explore the differences in detail to help you make an informed decision.

Top Home Loan Plans in UAE

What is a Home Loan and Loan Against Property?

Let’s understand the meaning of both the loans in the UAE: 

• Home Loan: It’s a loan from banks or financial institutions to help you buy or build a home. It provides you with essential funds to buy a house at a certain interest rate.
• Loan Against Property: A loan against home equity is a secured loan where your property serves as collateral. The lender holds a mortgage on your home until the whole amount has been paid. It can be used for a variety of purposes, including personal and business needs. With this loan type, you can borrow 70%-80% of the current market value of your property.

Difference Between Home Loan and Loan Against Property

Tabled below are the key differences between them:

Category	Home Loan	Loan Against Property
Purpose	Helps you buy a house or property	Supports various needs such as business expansion, debt consolidation, higher education, medical emergencies, and more.
Collateral	The purchased property acts as collateral for the loan	The property on which you take the loan is used as collateral.
Funds Usage	Used to buy a house or construct a property	Can be used for personal and business needs such as weddings, buying a house, medical expenses, and so on.
Interest Rate	Lower interest rates	Higher interest rates.
Loan Amount	You can borrow the amount based on your salary, credit Score, and price of the property being purchased	You can take the loan amount based on the property’s value in the market. Generally, it’s 70%-80% of the property value
Loan Tenure	15-30 years	Shorter: Can be taken up to 15 years

Required Documents for Home Loan and Loan Against Property

The following documents are required for home loan and loan against home equity:

Elementary Documents

• Original Emirates ID
• Copy of the passport
• Valid resident visa

Specific Documents

Salaried Individuals	Self-Employed	Co-Borrowers’
Salary certificate Latest pay stubs (if salary varies by more than 10%) Previous employment proof (if less than 3 years with the current employer) Last 6 months’ bank statement  Property documents (if you are taking loan against the home)	Trade license copy  Memorandum and Articles of Association Last 6 months’ bank statement  Audited financial reports for the last 2 years Property documents (if you are taking loan against the home)	Income proof  Memorandum of Association (MOA),  Trade license Passport copies of partners (if the co-borrower is a company)

Note: All the elementary documents are the same for the aforementioned categories. Make sure to submit valid documents.

Interest Rates of Home Loans and Loans Against Property by Different Banks

Here’s a list of the banks in the UAE, offering a varied range of interest rates for home loans and loans against properties:

Bank Name	Scheme Name	Flat Interest Rate	Reducing Interest Rate
FAB	Home Loan for Residences and Investment in UAE	Starting from 3.94%	N/A
	Islamic Home Finance	Starting from 3.94%	N/A
	Home Loans for Non-UAE Residents	N/A	N/A
RAKBANK	Home In One	Starting from 4.49%	Starting from 4.89%
	Mortgage Home Loan	Starting from 2.09%	Starting from 3.99%
Standard Chartered Bank	MortgageOne	Starting from 1.89%	Starting from 3.40%
	Saadiq Home Finance	Starting from 1.66%	Starting from 2.99%
Emirates NBD	Home Loans for UAE Nationals and Expats	Starting from 3.04%	Starting from 5.75%
Emirates Islamic	Home Finance Bina’a for UAE Nationals	Starting from 3.99%	3 months EIBOR + 1.74% p.a.
	Home Finance Manzili	Starting from 3.99%	3 months EIBOR + 1.74% p.a.
	Mohammed Bin Rashid Housing Establishment	Starting from 3.99%	3 months EIBOR + 1.74% p.a.
CBD	Mortgage Loan for Salaried and Self-Employed	Starting from 2.18%	Starting from 3.54%
HSBC	New Home Loan	Starting from 1.96%	Starting from 3.59%
	Fixed Interest Rate Home Loan	Starting from 3.59%	N/A
ADIB	Home Loan For UAE Nationals and Expats	Starting from 2.06%	Starting from 3.75%
National Bank of Fujairah	Home Loan	N/A	Starting from 3.49%
ADCB	Standard Mortgage Loan	N/A	Starting from 3.99%
	Mortgage Home Saver	N/A	Starting from 4.25%
Dubai Islamic Bank	First Time Buyers	Starting from 1.79%	Starting from 3.25%
	Home Financing for Badr Properties	Starting from 1.92%	Starting from 3.49%
	Existing Homeowners	Starting from 1.92%	Starting from 3.25%
	Government Housing Schemes	Starting from 2.1%	Starting from 3.75%
CBI	Home Loan for Salaried Individuals and Business Owners	Starting from 2.20%	Starting from 3.99%

Frequently Asked Questions

You May Also Know
Mortgage Loan Eligibility in UAE	Mortgage Loan Pre-Approval in UAE
Mortgage Loans for Expats	Home Loan Balance Transfer in UAE
Home Loans for Non Resident	Mortgage Loan for Salaried Employees
Under Construction House Loans with Variable Interest Rate	Mortgage Loan Procedure in UAE