K|Wise · Glossary
Buy-to-Let Mortgage
A mortgage used to purchase a property that will be rented out rather than occupied by the borrower. Lenders assess the deal on projected rental income alongside the borrower's personal income.
In plain English
A mortgage used to purchase a property that will be rented out rather than occupied by the borrower. Lenders assess the deal on projected rental income alongside the borrower's personal income.
What Buy-to-Let Mortgage means in practice
A buy-to-let mortgage funds a property you intend to let rather than live in. The lender is underwriting two things at once: the property's ability to generate rent, and your ability to cover the instalment during void periods when it generates none.
Because the bank carries more risk than on an owner-occupied home, buy-to-let deals typically require a larger deposit and carry a slightly higher margin. Rental income usually supports the case rather than replacing the income test.
How it works in the UAE
In the UAE an investment or second property is capped at 60% financing for expatriates and 65% for UAE nationals, so the deposit starts at 40% and 35% respectively. Lenders will normally want to see a tenancy contract or a credible rental valuation, and many discount the stated rent before feeding it into the affordability calculation.
A worked example
An expatriate buying a AED 1,200,000 apartment to let can borrow up to 60% — AED 720,000 — and must fund AED 480,000 from their own resources, before adding the 4% Dubai Land Department fee of AED 48,000 and the other transaction costs.
Terms that come up alongside Buy-to-Let Mortgage
Amortisation
The gradual repayment of a mortgage loan through scheduled monthly instalments of principal and interest. In the early years more of each payment goes to interest; in the later years more goes to principal.
Read the definitionCap
A contractual maximum on how much your variable mortgage rate can rise over a defined period. A common UAE structure caps the rate at 5.99% for the first 3 years.
Read the definitionConveyancing
The legal process of transferring property ownership from seller to buyer, including title checks, NOC issuance, mortgage registration, and the final Land Department transfer.
Read the definitionDBR (Debt Burden Ratio)
The total of your monthly debt commitments — mortgage, car loan, credit card minimums, personal loans — expressed as a percentage of your net monthly income. UAE Central Bank caps the DBR at 50%.
Read the definitionDrawdown
The point at which the lender releases the mortgage funds — typically paid directly to the seller at the Land Department on transfer day.
Read the definitionEIBOR
The Emirates Interbank Offered Rate — the benchmark interest rate at which UAE banks lend to each other. Variable mortgage rates are quoted as EIBOR plus a lender margin (e.g. 3M EIBOR + 1.50%).
Read the definition