Demystifying the Mortgage Calculator: A Detailed Breakdown

Published on July 28, 2024

Our Mortgage Calculator is more than just a simple payment estimator. It's an all-in-one tool designed specifically for the UAE market, taking into account local regulations, fees, and conventions to provide a comprehensive and accurate financial picture of your property purchase.

This article will walk you through exactly how it works and what factors are considered in each step of the calculation.

1. Minimum Down Payment Calculation

The first and most crucial step is determining the minimum required down payment. This is not a fixed number in the UAE; it depends on your residency status and the property type.

Our calculator automatically adjusts this based on your selections, using the official rules:

• UAE National: Minimum 15% down payment for ready residential properties.
• UAE Resident (Expat): Minimum 20% down payment for ready residential properties.
• Non-Resident: Minimum 40% down payment for ready residential properties.
• Off-plan Properties: A flat 50% minimum down payment is required by the Central Bank, regardless of residency status.

The slider in the form is automatically constrained by this calculated minimum, ensuring you start with a valid input.

2. Calculating the Monthly Payment

Once the down payment and resulting loan amount are established, the calculator estimates your monthly mortgage payment. It uses a standard formula for an amortizing loan, which considers three main factors:

• The total loan amount (the property price minus your down payment).
• The annual interest rate.
• The total duration of the loan (in years).

This calculation ensures that each monthly payment correctly covers both the interest accrued for that month and a portion of the original loan balance, gradually paying it down over the loan term.

3. The Comprehensive Upfront Costs Breakdown

This is where our calculator truly shines. The monthly payment is only one part of the story; the upfront cash required to close the deal is substantial. Our tool calculates all of the following:

• Down Payment: The largest cash portion, based on your selected percentage.
• Land Department (DLD) Fee: Calculated as 4% of the property's purchase price. This is a standard government fee in Dubai, and similar fees apply in other Emirates.
• Title Deed Issuance Fee: A fixed fee of AED 580.
• Mortgage Registration Fee: Calculated as 0.25% of the loan amount, plus a fixed fee of AED 290. This is only applied if there is a loan.
• Registration Trustee Fee: A fee paid to a DLD-approved office for handling the registration. This is typically AED 4,000 (+ 5% VAT) for properties over AED 500,000, or AED 2,000 (+ 5% VAT) for properties under that price. Our calculator includes the 5% VAT.
• Property Valuation Fee: A fee charged by the bank to have the property professionally valued. This is an input in our form, defaulting to a standard AED 4,000.
• Real Estate Agency Fee: Usually 2% of the property price. Our calculator includes the mandatory 5% VAT on top of this fee.
• Mortgage Processing Fee: A bank fee for arranging the loan, calculated as a percentage of the loan amount. We also include the 5% VAT on this fee.

4. Bringing It All Together

By combining the estimated monthly payment with a detailed and accurate breakdown of all upfront costs, the Mortgage Calculator provides a complete financial overview. You not only see what your recurring payment will be but also the total amount of cash you need to have ready on day one. This prevents surprises and empowers you to negotiate and plan your purchase with confidence.