Equity release
In the UAE, you can take funds out of an existing property. Generally, these funds should be used towards another property purchase or a renovation.
The basics
If you own a property in the UAE, banks will lend additional funds to you against this property. This is possible if you own the property in cash, and also possible if you have a mortgage already, depending on the percentage still owed to the bank.
The central bank regulates that funds taken out against an existing property must go towards a new purchase or renovation. So in all cases, you will need to show proof that you are buying another property or conducting a renovation.
Borrow against your existing property
The bank lends you funds against the property you already own.
Buy a new property
Use the funds towards your next purchase.
Renovate
Use the funds to renovate.
How much can I borrow
This varies quite a lot by bank.
Some banks will lend to you up to 80% of your property's current market value. Other banks will only allow 60%, and of course if you already have a mortgage on the property, the amount you owe needs to be deducted from these percentages.
This is only an estimate, based on banks lending up to 80% of your property's market value (70% for properties of AED 5,000,000 or more), minus what you still owe. Some banks only lend up to 60%, and the final figure depends on the bank's own valuation.
Can I get cash?
It is difficult to get cash from the banks. Since the central bank does not want banks to lend funds to you for other purposes outside purchasing a new property or renovating, most banks will only transfer funds to the seller of the next property or contracting company.
A few banks will give a certain amount of cash in hand, on the basis of you showing a renovation quotation:
- One bank will give up to 20% of the property value to you in cash
- Other banks have limits of AED 300,000–500,000
Small disclaimer: I don't mean physical cash in your physical hands. The banks will transfer funds into your personal account.
Using equity funds for a property down payment
If you want to use equity funds as a down payment for a new property purchase, and also get another mortgage on this next property, this is totally possible. However, not all banks allow this to happen.
When using equity funds for down payment, you must keep in mind that if you have an 80% mortgage on one property, you can only get a 60% mortgage on the next property.
The process
The process varies depending on the type of transaction you are doing.
1. Using funds for a new off-plan purchase
- 1
Get bank pre-approval
Issued within 1–7 working days, valid for two months. The bank confirms how much they'll lend and under which terms.
- 2
Valuation and final approval
The bank values the property, and I request your final mortgage approval.
- 3
Funds released to developer
A new title deed for your property is issued, and the bank releases a cheque in the name of the developer you are purchasing from.
2. Using funds for down payment on a ready property
- 1
Get bank pre-approval
We get a pre-approval that covers the amount needed for both properties.
- 2
Value your existing property
The bank values the property you already own, so we know how much you can take out.
- 3
Sign on your next property
You sign the MOU (Form F) on the property you're buying.
- 4
Final approvals
Once the bank has seen the MOU, it issues final approval on the equity release. At the same time, we arrange the valuation and final mortgage approval on your next property.
- 5
Transfer
The bank issues two cheques in the seller's name, and we use them to complete the transfer of your new property.
3. Using funds for renovation
- 1
Get bank pre-approval
Issued within 1–7 working days, valid for two months. The bank confirms how much they'll lend and under which terms.
- 2
Valuation and final approval
The bank values the property, and I request your final mortgage approval.
- 3
Funds released
A new title deed for your property is issued, and the bank releases the funds to your renovation company or transfers them into your bank account.