Second Home
January 28, 2025

How to Finance a Second Home in the UAE

The UAE’s real estate market continues to attract international investors, with Dubai and Abu Dhabi leading as prime destinations. In 2025, purchasing a second home in the UAE offers not only potential rental income but also access to long-term residency options. However, navigating the financing landscape requires understanding current mortgage rates, down payment requirements, and the impact of the UAE Golden Visa on property investments.

1. Understanding Mortgage Options for Second Homes

Mortgage Rates in 2025

As of May 2025, mortgage rates in the UAE have become more competitive:

  • Fixed-rate mortgages: Starting from 3.99% for a 1-year term.

  • Variable-rate mortgages: Linked to the Emirates Interbank Offered Rate (EIBOR), with current rates around 4.2%.

These rates are notably lower compared to global markets, making UAE property investments more attractive.

Loan-to-Value (LTV) Ratios

For second homes, the Central Bank of the UAE stipulates:

  • For properties valued above AED 5 million: Maximum LTV of 75%.

  • For second and subsequent homes or investment properties: Maximum LTV of 65% .

This means buyers typically need to provide a significant down payment, often ranging from 25% to 35%.

2. The Impact of the UAE Golden Visa on Property Financing

The UAE Golden Visa program offers long-term residency to investors, which can facilitate:

  • Easier mortgage approvals: Banks may offer more favorable terms to Golden Visa holders.

  • Access to higher LTV ratios: Some banks may extend up to 70% LTV for Golden Visa holders, depending on the property and financial profile.

  • Exemption from upfront costs: Recent policy changes have removed the AED 1 million or 50% upfront payment requirement for property-linked Golden Visas.

These benefits make the Golden Visa an attractive option for international investors.

3. Down Payment Requirements and Financing Structures

Standard Down Payment

For non-residents, banks typically require:

  • 20% for properties valued below AED 5 million.

  • 30% for properties valued above AED 5 million.

These requirements are consistent across most financial institutions.

Alternative Financing Plans

Some developers offer innovative payment structures:

  • Danube Properties’ 1% Payment Plan: Allows buyers to pay 1% of the property price monthly after an initial 20% down payment, making homeownership more accessible.

These plans can ease the financial burden for buyers.

4. Rental Yields and Investment Potential

The UAE’s rental market remains robust:

  • Average rental yield: Approximately 5% nationwide.

  • High-demand areas: Locations like Palm Jumeirah can offer yields exceeding 7%.

Investing in these high-demand areas can lead to attractive returns.

5. Steps to Secure Financing for a Second Home

  1. Assess Eligibility: Ensure you meet the bank’s criteria, including age, income, and credit score.

  2. Prepare Documentation: Gather necessary documents such as passport, proof of income, bank statements, and property details.

  3. Choose the Right Mortgage Type: Decide between fixed or variable rates based on your financial situation.

  4. Apply for Pre-Approval: Obtain a pre-approval letter to streamline the property search process.

  5. Finalize the Deal: Upon selecting a property, complete the purchase and mortgage formalities.

Utilizing tools like the Investment Tool can assist in evaluating mortgage options and investment scenarios.

Financing a second home in the UAE in 2025 offers promising opportunities for international buyers. With competitive mortgage rates, favorable LTV ratios, and the advantages of the Golden Visa program, investors can make informed decisions. By understanding the current market dynamics and financing options, you can navigate the process effectively and capitalize on the UAE’s real estate potential.