UAE's rapid growth and favorable financial regulations have made it one of the world's business centers and an ideal environment for business development, entrepreneurship, and business opportunities. Business growth is made especially easy with commercial mortgage loans, one of the many advantages the UAE has to offer to both established and budding businesses. Commercial properties, however, such as hotel apartments and serviced apartments, can also prove especially profitable to private individuals, and can also be obtained through mortgage loans.

A commercial mortgage loan provides businesses with the opportunity to
buy commercial property they might otherwise not be able to afford, or they can pay in installments and save money for other purposes. Loans for commercial properties made by individuals are essentially residential and provide an individual with the chance to let the rental income cover the mortgage payments. Listed below are some things you should know about mortgages for commercial properties in the UAE.

What is a commercial mortgage for businesses?

The term "commercial finance loan" (also called a commercial mortgage) refers to a loan that is specifically used to finance non-residential properties including offices, industrial units, warehouses, shops, hotels, restaurants, and mixed-use properties. A commercial property is one that serves a commercial purpose and generates income for a business, so a loan for this type of property is extremely advantageous.

Commercial mortgage types

There are two types of commercial mortgages: owner-occupier mortgage and commercial investment mortgage. Owner-occupier commercial mortgage is used for purchasing a commercial property that will be used as the premises of the business and the income will be generated through business operation. A commercial investment mortgage is used for purchasing a commercial property that will be rented out and the income will come from rental return. 

Important facts
  • A maximum LTV (Loan-to-value) ratio of 80% is allowed in the UAE
  • A 20% down payment is required up front
  • The maximum term of a commercial mortgage is 15 years
  • Fixed interest rates are not usually associated with commercial mortgage loans
  • Mortgage rates for commercial properties will often be higher than those for residential properties
Application process and documentation 

Generally, the process of applying for a commercial mortgage loan is quite similar to the process of applying for other loan types, so the first step is to gather all the relevant documents and submit them to the lender. After your financial status has been assessed and the loan has been approved, you search for commercial properties matching the loan amount and submit the deposit along with any other documents needed.

It is mandatory for UAE nationals to submit copies of their Emirates identification cards, whereas expats must submit copies of their passports and visas.

For salaried applicants, earning proof and other employment-related documentation will be required, including recent salary slips, salary certificates, employment proof (for the past three years), and bank statements (for the past six months). Self-employed applicants must provide their MOA (Memorandum of Association), a copy of their trading license, and their bank statements (for the last six months) and audited financial reports (for the last two years).

Commercial mortgages - UAE Banks

A number of major UAE banks offer commercial mortgages, including:
Bank Key features
Abu Dhabi Commercial Bank
  • For UAE registered businesses only
  • Up to AED 10M
  • Up to AED 2M of equity refinance
  • Up to 10 years of flexible loan terms
Ajman Bank
  • Up to AED 10M financing
  • Up to 5 years of repayment period
  • Minimum length of business is 2 years
Commercial Bank of Dubai
  • For UAE registered businesses
  • Applicable for properties in the Emirate of Abu Dhabi and Dubai
  • Flexible loan tenors
Dubai Islamic Bank
  • 15 years flexible tenure
  • Up to 70% property value finance
Emirates Islamic
  • Up to AED 10M finance amount
  • Up to 60% finance
  • Repayment - up to 15 years
  • Completed properties in Dubai and Abu Dhabi
Emirates NBD
  • Low interest rate of 4.99% fixed for 2 years
  • Up to AED 7M maximum loan amounts
  • Up to 60% Loan to Value
  • Up to 10 years repayment tenor
First Abu Dhabi Bank
  • High loan amount
  • Flexible terms and payment plans
Mashreq Bank
  • Up to AED 10M
  • Up to 15 years loan tenor
  • UAE Nationals or Resident Expatriates
  • Self employed individuals only
RAKBANK
  • For commercial properties located in the UAE, for UAE companies and UAE nationals

Mortgages for commercial properties - private individuals

In addition to businesses, individuals can purchase a commercial property through a mortgage loan if they choose to invest in a hotel or serviced apartment. Hotel and serviced apartments are considered commercial properties because they are very profitable, even though they are residential in essence, you can generate rental income by sharing profits with the hotel. 

The mortgage you’d take out if you consider purchasing these types of properties would be residential, so you’ll follow the standard residential mortgage application process. Contact us today and with our help, you will find the best hotels and serviced apartments in Dubai and get approved for a mortgage if you meet the eligibility criteria. 

To Sum Up

In this article, you learned that commercial mortgage loans are a lot like residential mortgage loans, but are extremely beneficial for UAE businesses. You’ve also found out that individuals can purchase a commercial property (hotel and serviced apartments) and significantly benefit from them. We do not currently offer commercial property sales or commercial mortgages, but we will in the future, so stay tuned and check them out once they are available.

If you’re interested in residential real estate and residential mortgages in Dubai, our experienced team of real estate and mortgage professionals can get you access to various options, help you make an informed decision and secure the property you desire. 

If you’re interested in mortgage financing, check out our mortgage calculator and options for UAE nationals, expats and non-residents. You can also search our platform for apartments in Dubai, developed by some of the most prominent developers, if you need help finding the right property. Find out more about UAE real estate and mortgages in our blog section, which includes topics such as (and many more):
Photo credits:
  1. Master1305 | Freepik

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