You’re tired of seeing your money fly into your landlord’s pocket, so you think about buying property in Dubai soon – but is it a good time to get a mortgage?

Certainly, according to Preeti Bhambri, managing director of, a personal finance website in the UAE. She said the interest rates on home loans have significantly dropped by almost 100 basis points over the last 12 to 18 months, with rates now touching as low as 3.75 per cent per year.

Banks are also waiving the valuation and processing fees, which means buying a property in Dubai can save nearly Dh20,000 dirhams in administrative charges if they sign up for a Dh1.5 million mortgage.

Borrowers who intend to settle their loan early don’t need to worry about excessive penalties as well, because early repayment terms have become more relaxed and customers now have the flexibility to repay their borrowings partially with lower or zero penalty.

“From a financial expense point of view, this is a great time to take a home loan,” said Bhambri.

“The interest rates now have come down almost 100 basis points. Most banks are now offering new home loans at starting interest of 3.99 per cent for the first year and 3.49 per cent for buyout loans. The rates are at their lowest ever.”

The continued rise in the UAE’s housing rents, which have increased significantly by as much as 66 per cent between June 2014 and 2013, have prompted some tenants to consider buying property in Dubai.

Expatriates in the UAE can borrow up to 75 per cent of the property value, while Emiratis can have 80 per cent of their purchase financed through banks.

In December 2012, the majority of banks were offering a promotional home loan rate of 4.99 per cent for the first year. There were some exceptions, however, such as those banks that don’t cater to the mass segment, so at large, the starting rate for a mortgage was 4.99 per cent per annum.

Borrowers with outstanding debt are also given the option to switch their loan to another bank at a lower interest rate. So, anyone who had borrowed Dh2 million at 4.99 per cent and shift to a loan with a 3.99 per cent interest stands to save Dh160,000.

Here are some home loan offers worth looking into:

• Commercial Bank International (CBI) offers loans starting at 3.75% per annum with a free home and home content insurance and zero valuation fee for buyout loan cases.

• Emirates NBD is offering a starting rate of 3.39% per annum for buyout loans.

• Noor Bank is offering new home loans at a starting interest of 3.75% per annum.

• Abu Dhabi Islamic Bank, HSBC, Emirates Islamic Bank and Abu Dhabi Commercial Bank are all offering home loans at a starting rate of 3.99 per cent per annum.

Source: Cleofe Maceda, Senior Web Reporter, gulfnews.comGN