Source contribution
When a Dubai home looks fairly priced but the mortgage needs more cash
Disclosure
Mortigo is a Dubai mortgage brokerage. This is general educational commentary, not a product recommendation, nor an assurance that a loan will be approved. No payment or referral arrangement is involved, in either direction.
Editor's note. FairSqft's Price Check tells you whether an asking price is in line with similar sales recorded by the Dubai Land Department. It does not tell you how much a bank will lend. We asked a mortgage broker to explain that second step. We checked every figure and rule below against the Central Bank of the UAE's rulebook.
FairSqft's Price Check compares an asking price with similar sales recorded by the Dubai Land Department (DLD). That is a useful starting point for a buyer, but it does not answer a separate question: how much will a particular lender actually finance?
A sale price and a bank valuation are different numbers
A recorded sale price describes a completed transaction. A bank valuation is a property-specific assessment for a financing decision. The valuer may consider condition, floor, view, layout, available comparable transactions and other characteristics. Two homes in the same development can therefore attract different assessments. Neither an online estimate nor an agreed purchase price binds the lender.
A hypothetical example
Consider a hypothetical ready-home purchase. A buyer agrees to pay AED 1.5 million and meets a lender's criteria for a mortgage of up to 80% of the eligible property value. At the agreed price, that would be AED 1.2 million of borrowing and AED 300,000 of buyer funds, before transaction costs.
Now assume the lender's independent valuation is AED 1.4 million and it applies the same 80% ratio to that lower amount. The mortgage becomes AED 1.12 million. To complete at the agreed AED 1.5 million price, the buyer would need AED 380,000 before fees: an additional AED 80,000. This example is illustrative, not a lending offer or a prediction of any bank's valuation.
| At the agreed price | At the bank's valuation | |
|---|---|---|
| Value the loan is based on | AED 1,500,000 | AED 1,400,000 |
| Mortgage at 80% | AED 1,200,000 | AED 1,120,000 |
| Buyer's own funds, before fees | AED 300,000 | AED 380,000 |
The regulatory caps are ceilings
Regulatory maximums are ceilings, not entitlements. Under the Central Bank of the UAE's current framework, a qualifying first owner-occupied home valued at AED 5 million or less can have a maximum loan-to-value ratio of 80% for an eligible expatriate borrower and 85% for an eligible UAE national. Above AED 5 million, the first-home caps are 70% and 75%. Different caps apply to other buyer and property categories, while banks may apply more conservative limits. Income, existing debts, the property and final underwriting also matter.
Three numbers to keep apart
Before committing to a purchase, a buyer should distinguish three figures: the asking or agreed price, the bank-accepted valuation and the mortgage amount the lender is willing to approve. They should also budget for government registration costs and other completion expenses separately. A fair-looking price can still leave a real financing gap.
*By Kunal Sharma, Founder, Mortigo Mortgage Broker L.L.C. Mortigo is a Dubai mortgage brokerage. This is general educational commentary, not a product recommendation, nor an assurance that a loan will be approved. No payment or referral arrangement is involved, in either direction. Edited and fact-checked by FairSqft. How we check claims*