Mortgage Myths in Dubai Busted – What Banks Don’t Always Tell You
Buying a home in Dubai feels exciting, but when you start exploring mortgages, things can get confusing—fast. There are so many opinions, so much jargon, and way too many assumptions. The result? You hear a lot of myths being passed around as facts. Some come from well-meaning friends, others from outdated online sources, and a few from banks who simply leave out key details unless you ask.
This isn’t about blaming anyone—banks are in the business of lending, and you’re in the business of making smart financial decisions. That’s why it’s so important to get clear, real answers before you commit to what might be one of the biggest financial decisions of your life.
Let’s go through the most common mortgage myths in Dubai, break them down, and shed light on what banks often don’t tell you—until it’s too late.
You Need to Be a UAE National to Get a Mortgage
This myth probably existed back when Dubai’s property market was just opening up to foreign buyers. But today, it couldn’t be further from the truth. Expats are not only allowed but encouraged to invest in property in Dubai’s freehold areas. Banks in the UAE lend to both UAE nationals and expats—it’s just that the terms differ slightly.
UAE nationals sometimes get better rates or can put down a smaller down payment. But as an expat, you still have solid financing options. You’ll typically be asked to pay a minimum of 20% upfront for a ready property (and sometimes 25% for higher-value homes). That’s standard, not a limitation.
Some expats also wrongly believe that only salaried professionals are eligible. Self-employed individuals can qualify too (we’ll cover that soon). The main thing is to show proof of consistent income, a stable job or business, and a clean financial track record. Your nationality doesn’t stop you from owning your dream home in Dubai.
If the Bank Pre-Approves Me, I’m Guaranteed the Loan
Pre-approval is a useful step—but it’s not a final “yes.” What banks issue during pre-approval is basically a conditional green light. They look at your salary, job status, liabilities, and credit history. If everything checks out, they say, “We’re likely to approve you up to X amount.”
But here’s what they don’t always highlight: the real decision happens after you choose the property. That’s when the bank does a property valuation, checks the building’s legal status, verifies if the developer is approved, and ensures the price matches the market. If anything fails that second check, your mortgage can be denied—even with a pre-approval in hand.
Another factor is your own situation. If your financial profile changes before final approval—like you change jobs, take a new car loan, or miss a credit card payment—the bank might pull back. So yes, pre-approval is great, but treat it as an estimate, not a final promise.
Banks Will Always Offer Me the Best Rate
We all like to think that banks will give us their best deal up front. But just like in any business, there’s always room to negotiate—and there’s rarely just one offer. Many banks in Dubai will give you a “standard” rate first, expecting you to either accept it or push for better.
And then there’s the issue of teaser rates. These are promotional rates that look amazing at first glance—say, 2.99% fixed for one year—but after that, it jumps to a variable rate based on EIBOR (Emirates Interbank Offered Rate), which can fluctuate. Over the long term, you may end up paying much more than you planned.
That’s why it’s better to ask for the Annual Percentage Rate (APR) instead of just the flat interest number. The APR includes all hidden fees and gives a truer picture of your yearly cost. Also, don’t be afraid to compare offers from three or more banks. Loyalty to your salary bank might cost you.
It’s Better to Borrow the Maximum Amount I Qualify For
On paper, it might look like a smart move—if you’re eligible for a loan of AED 2 million, why not use the full amount? But this thinking can trap you into financial stress, especially in a city like Dubai where expenses go beyond rent or mortgage.
Living costs include things like DEWA bills, service charges, school fees, food, travel, medical, and more. If your monthly mortgage eats up 40–50% of your income, what happens when you face a financial emergency or a job change?
Also, people often forget that interest rates can go up. If you’ve taken out a variable-rate mortgage and EIBOR rises, your monthly repayment could suddenly increase. Stretching your budget too far means you may not be able to handle that bump.
The best strategy? Borrow what’s comfortable, not just what’s possible. Buying a slightly smaller or more affordable home could give you more flexibility and peace of mind in the long run.
I Can’t Get a Mortgage Because I’m Self-Employed
This used to be tough, yes—but not anymore. More banks in Dubai are adjusting their products for business owners, freelancers, and consultants. The documentation requirements are more detailed than for salaried professionals, but approval is very possible.
Here’s what banks usually want: at least two years of business activity, proof of consistent income, audited financials, and trade licenses (for local businesses). You’ll also need business and personal bank statements showing healthy cash flow.
One smart move is to use a mortgage broker who understands which banks are more flexible for self-employed profiles. They can help you present your documents in the right way, highlight your income patterns, and smooth out the process.
So no, being your own boss doesn’t lock you out of the property game. It just means your road to approval is slightly more paperwork-heavy—but with the right support, you’re just as mortgage-ready as anyone else.
Once I Get the Mortgage, I’m Locked In Forever
Many buyers in Dubai think mortgages are lifelong commitments. But the reality is, you have options. You can refinance your mortgage with another bank, make partial repayments, or even settle it early—often with manageable penalties.
Refinancing is common here. If you started with a higher interest rate a few years ago and see better rates today, you can switch to another bank. Just make sure you factor in early settlement fees, which the Central Bank has capped at 1% or AED 10,000 (whichever is lower).
Also, some banks allow you to pay off 10–20% of your mortgage each year without penalty. This is a great way to save on interest if you get a bonus or extra income. Flexibility matters, especially in Dubai where career paths and life plans can change quickly. Knowing you’re not stuck gives you more control over your future.
Off-Plan Properties Always Come with Better Mortgage Terms
Off-plan properties in Dubai often come with attractive developer payment plans, and that’s where the confusion starts. Buyers think, “If I’m paying slowly during construction, I must be getting better financing.” But the truth is, mortgages on off-plan units work differently.
Most UAE banks won’t release a mortgage until the property is handed over. That means you’ll need to pay the down payments and other milestones from your own pocket during construction. Once handover happens and the property is officially registered, the bank steps in.
Also, not every off-plan project is on a bank’s approved list. If the developer is new or has limited financial backing, the bank might reject the property outright. Always ask your bank (or broker) in advance if they finance the specific project you’re considering.
Off-plan deals are not bad—but they require careful planning. Make sure your financing strategy matches the payment timeline the developer expects.
All Banks Will Finance Any Property I Choose
This is where many first-time buyers get caught off guard. You find the perfect apartment in Business Bay or a villa in JVC, only to hear the bank won’t finance that specific unit. Why? Because not every building or community is approved for mortgages.
Some properties may have legal or valuation issues. Others are in buildings that don’t meet a bank’s internal quality standards or are flagged for poor maintenance. Even if the property looks great on the surface, the bank will do its own valuation—and if they think the price is inflated, they may offer you a lower loan amount or reject the file.
To avoid this, involve your mortgage advisor early. Before signing the Memorandum of Understanding (MoU) or putting down a deposit, ask if the property is financeable. A quick check can save you from losing time, money, and heartache later.
The Process is Too Complicated – It’s Better to Rent
Yes, applying for a mortgage has more steps than signing a rental agreement—but don’t let that scare you off. With the right help, the process is manageable. Brokers and mortgage advisors are available to walk you through every step, from document preparation to dealing with the bank.
Owning property in Dubai gives you long-term benefits—like stable monthly payments, equity growth, and the ability to rent out the property for income. If you’re planning to live here for more than 3–5 years, buying often makes more financial sense than renting.
And don’t forget: rental prices in Dubai can fluctuate wildly. With a mortgage, your payments are more predictable, and over time, your property may increase in value. The process may seem complicated now, but the rewards—financial and personal—can be well worth the effort.
Conclusion
Dubai’s mortgage market is full of opportunity, but it’s also filled with assumptions and myths that need clearing up. Whether it’s thinking only nationals can buy, or believing you’re locked into a mortgage forever—these ideas can hold you back from taking smart steps forward.
What banks don’t always tell you is that you have more power than you think. You can negotiate. You can switch banks. You can plan smarter and buy wisely. Don’t rush the process. Take time to learn, ask questions, and get advice.
Once you understand the real picture, getting a mortgage in Dubai becomes less scary—and a lot more empowering.