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Am I eligible for a mortgage?

There are generally a wide variety of factors that decide whether you qualify for a mortgage, although lenders tend to have different criteria.

Taking out a mortgage involves borrowing a large amount of money from lenders, so they won’t provide it to just anyone. That’s why lenders have criteria you have to meet to be eligible.

Let’s take a look at some of the factors that make you eligible for a home loan and see what you can do to improve your chances if you’re currently struggling.

What decides my eligibility for a mortgage?

There are generally a wide variety of factors that decide whether you qualify for a mortgage, although lenders tend to have different criteria. So if you’re rejected by one lender, it doesn’t mean you won’t be able to find another one who will accept your application (although it’s not advisable to make too many applications in a short space of time, as this could negatively affect your credit score and future chances of getting approved). Here are the main factors that will decide your mortgage eligibility:

Your credit score

Your credit score estimates how likely a person is to make repayments on a credit card or loan. It lets lenders know what your financial history is like, and whether you have missed any credit payments in the past to determine how risky it would be to lend to you.

The report also contains a record of your bank accounts, the number of credit cards, credit utilisation, due dates, whether there have been any missed payments, paid installments, due dates, along with any other relevant financial information.

The higher your credit score, the more likely you are to be approved for a mortgage, so keep that in mind. Check out our article on how to improve your credit score if you’re concerned about your credit score.

Please note: credit scores impact lending decisions on a case-by-case basis.

Your down payment

Before even thinking about applying for a mortgage, you’ll need to understand how much deposit is required. This differs slightly depending on if you’re a UAE national or a UAE resident. For first-time buyers looking at properties under AED 5 million, UAE nationals need a 15% down payment. For non-UAE nationals, you’ll need 20%.

If you’re a first-time buyer looking at a property valued over AED 5 million, then the size of the down payment increases: to 30% for UAE nationals, and 35% for non-UAE nationals.

So if you’re thinking about getting on the property ladder soon...get saving!

Your affordability

Lenders will assess your affordability by asking for proof of your income. You’ll need to provide this by showing your latest salary certificate, or the last 6 months of payslips (if your salary varies). Other documents lenders will ask for to assess affordability may include proof of additional income, bank statements, and credit card statements.

By demonstrating a steady, consistent income (whether salaried or self-employed), banks will consider you a less risky borrower and will be more likely to approve your mortgage application.

Your employment status

The criteria change slightly depending on if you’re salaried or self-employed. For salaried applicants, you must earn a minimum salary of AED 10,000 per month and, as mentioned above, provide proof of employment via payslips and salary certificate. If you have just started a new job then you will have to wait until your probation period has finished (usually between 3-6 months) as you won’t be eligible for a mortgage during this period.

If you are self-employed, then you must have been running your business for at least one year, and earn a minimum salary of AED 15,000 per month.

Other factors:

  • Minimum salary requirements are usually AED 10,000 for both UAE Nationals and non-UAE nationals. Other banks have a list of approved employers and will decide eligibility based on this.

  • Applicants must be at least 21 years of age for a home loan and must complete payments by the age of 65 for salaried applicants and 70 years for self-employed applicants.

  • The value of your total monthly repayments (i.e. including any existing repayments and credit cards) must not exceed 50% of your monthly income.

How can I check if I qualify for a mortgage?

There’s a lot to think about when trying to figure out if you’re eligible or not before applying for a mortgage. To see how much of a mortgage you could qualify for, use our simple mortgage calculator. If you’re still unsure, get in touch with our friendly in-house mortgage team who are happy to answer any questions you have.

Written by Huspy Team

Published on 21 June 2021

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