K|Wise · Glossary
LTV (Loan-to-Value)
The ratio of the loan amount to the property's value, expressed as a percentage. UAE Central Bank LTV caps: 80% for residents (first property under AED 5M), 70% over AED 5M, 50% to 75% for non-residents.
In plain English
The ratio of the loan amount to the property's value, expressed as a percentage. UAE Central Bank LTV caps: 80% for residents (first property under AED 5M), 70% over AED 5M, 50% to 75% for non-residents.
What LTV (Loan-to-Value) means in practice
Loan-to-value expresses the loan as a percentage of the property's value. It is the lender's primary measure of how much cushion it holds if it ever has to sell the property to recover the debt.
A lower LTV means more of your own money in the deal, and it usually buys a better rate as well as a wider choice of lenders. It also determines whether a deal is possible at all, because the regulatory caps are hard limits.
How it works in the UAE
The UAE Central Bank sets maximum loan-to-value by buyer type and property: 85% for a UAE national's first home up to AED 5 million, 80% for an expatriate at that level, dropping to 75% and 70% above AED 5 million, 65% and 60% on second or investment properties, and 50% on off-plan. The ratio is calculated on the lower of the purchase price and the bank's valuation.
A worked example
A AED 2,000,000 property with a AED 1,600,000 loan sits at 80% LTV. If the bank's valuation comes back at AED 1,900,000, the same loan is 84% of value — above the cap — and the lender will reduce the loan to AED 1,520,000, leaving the buyer to find the difference.
Terms that come up alongside LTV (Loan-to-Value)
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 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 definitionEquity
The portion of your property you own outright — the current market value minus the outstanding mortgage balance. Equity grows as you pay down the loan and as the property appreciates.
Read the definitionFixed Rate
A mortgage rate that is locked in place for a set period — typically 1, 3, or 5 years in the UAE. After the fixed period the loan reverts to the lender's variable rate unless refinanced.
Read the definitionMortgage Registration Fee
A fee charged by the Dubai Land Department to register a mortgage against a property title — currently 0.25% of the loan amount plus a fixed AED 290 admin fee.
Read the definitionOverpayment
Additional repayments made above your scheduled EMI to reduce the loan balance faster. Most UAE lenders allow up to 20% of the original loan amount per year without penalty.
Read the definition