Obtaining a mortgage in Dubai can be a frustrating process if you don’t know how and where to start. Getting a mortgage in Dubai is a multi-step process, and one of the most overlooked steps is mortgage pre-approval. If you have not heard about this term or don’t know why it is important, here is a guide to answer your questions.
What is mortgage pre-approval in Dubai?
Mortgage pre-approval in Dubai, in simplest words, is a simple notification from the lending institution that states how much they can lend in response to your application.
It is important to note that the pre-approval letter does not have any legal value. It is a response (to your application) after an initial assessment of your profile and the submitted documents.
Why mortgage loan pre-approval in the UAE is beneficial?
Although mortgage pre-approval Dubai is not mandatory, the following aspects will highlight why you should consider it.
1. Budget Determination
Getting mortgage pre-approval in Dubai or UAE helps you understand how much you can afford to borrow. This way, you can set a realistic budget for your property search that ultimately saves you from wasting time on homes that are not in your financial reach.
2. Competitive Advantage
In a competitive Dubai residential real estate market where demand for properties is often high, having a mortgage pre-approval can give you a competitive advantage.
Sellers are often more willing to negotiate with buyers who have preapproved financing. That is because it reduces the risk of the deal falling through.
3. Faster Closing
With mortgage pre-approval, the next process can move more quickly. This is beneficial when you find the right property and want to make an offer. Sellers prefer buyers who can move swiftly through the purchasing process. A pre-approval helps you demonstrate your financial readiness.
4. Negotiating Power
When you have mortgage pre-approval in UAE, you have a clearer understanding of your financial standing. You will be more confident in negotiations and can strengthen your position when making an offer on a property.
5. Avoiding Disappointment
Well, falling in love with a property first and then finding out later that you cannot secure the necessary financing can upset you. Mortgage pre-approval helps prevent such disappointment by ensuring you are aware of how much you can borrow.
6. Accurate Property Search
Being aware of a preapproved mortgage amount, you can focus your property search on homes that are within your budget. This saves time and effort and helps you find a property that meets both your financial and lifestyle needs.
7. Streamlined Process
Having a mortgage pre-approval in Dubai means you’ve already gone through some of the initial steps of the mortgage application process. This can make the overall home-buying process smoother and less stressful.
Now, here are some important questions related to mortgage pre-approval in Dubai and UAE.
How can I secure a pre-approval for a mortgage?
To get a mortgage pre-approval Dubai, you can reach out to lenders (such as banks) or consultancies as per your convenience.
The process may take
- 3-5 days for salaried individuals in Dubai
- 7-10 days for business owners in Dubai
- 10-14 days for non-residents who wish to get a mortgage in Dubai
What is the validity time of my pre-approval?
Most banks set a timeframe of 45-90 days for pre-approval before it expires. Lenders take this precaution due to potential changes in the applicant’s circumstances. If the pre-approval expires, the applicant will have to submit some updated documents to renew it.
Does obtaining a mortgage pre-approval in Dubai impact my credit?
The good news is that seeking a pre-approval will not affect your credit file. Unlike other countries, where applying for a mortgage can impact your credit score, in the UAE, any application appears on your AECB report, but there is no negative consequence.
Can a bank reject my application?
The approval of a pre-approval in Dubai is primarily based on your profile and the documents you submit to the lender.
It is important to disclose any factors that might affect your application upfront. Problems like bounced cheques or missed credit payments can influence your final approval. Therefore, it is better to be transparent from the start.
Does a pre-approval guarantee my final mortgage?
No. Although a pre-approval puts you in a strong position, it does not guarantee your final mortgage until you receive the keys to your new home. After obtaining pre-approval, you still need to assess the property and proceed to the final offer letter before the loan can be disbursed.
Important: Different credit lenders in Dubai and UAE may use various terms for a mortgage pre-approval in Dubai. You may read or hear terms like Approval in Principle (AIP), In-Principle Approval (IPA), or Decision in Principle (DIP).
You can also read our detailed guide on how to get a mortgage in Dubai.
Final words
Mortgage pre-approval in Dubai may not be mandatory, but it clarifies many things for you. You will be able to know how much you can borrow and what is your financial position. This way, you can choose the right option when searching for a home in Dubai.
If you need any assistance related to your real estate needs, feel free to contact Orchid Homes Real Estate, Dubai.