Equity Release: Dubai

Equity Release Dubai

As more ex-pats and foreign investors invest in the Dubai property market on the back of the Emirate’s booming property market, surging demand for real estate and appreciating property prices, more borrowers are looking at equity release in Dubai. In these scenarios, ex-pats and foreign investors that own Dubai property are looking to use quality assets (villas, upscale apartments, mansions, penthouses and other prime residential properties) as security for a high-value loan. This allows borrowers to use the equity tied up in a Dubai property as a quick and efficient way to access capital. 

Only a few lenders offer an equity release loan in Dubai and it remains a very niche part of the market and these players prefer to work with brokers, rather than borrowers directly. As a borrower, working with a broker is critical - especially if you want a high-value loan - as we will be able to negotiate the best deal for you based on your financial requirements. Usually, we will be able to tailor the deal more specifically to your requirements and get the absolute best rate available for you. Our experience with equity release Dubai includes:

  • High-value equity release deals against residential properties including penthouses, villas and luxury apartments
  • Working with borrowers that have unusual or delicate financial backgrounds, or financial scenarios that some conventional finance lenders (i.e. banks) can’t accommodate
  • Delivering transactions quickly, allowing borrowers to complete loans against Dubai property quickly and access capital in just a few weeks
  • Working with Emirati nationals, resident ex-pats and non-resident investors to broker equity release from Dubai property

Equity Release Dubai: Overview

Very few lenders offer loans against property in Dubai, especially to ex-pats and non-resident real estate investors. Releasing equity from properties in the Emirate is always a relatively complex process because multiple jurisdictions are usually involved in a Dubai equity release loan (i.e. a property in Dubai owned by an Indian national who is resident in the UK). However, while equity release deals themselves can be complex, lenders can execute these transactions at pace, often in as little as 2-3 weeks, if the relevant structures are in place and the parties involved to deliver the legal side of the transaction can move at pace.

Loan Against Dubai Property: How Much Can I Borrow?

Equity release in Dubai is still a relatively niche part of the lending market and very few lenders offer this type of loan. Those that do are often boutique, international lenders who have the sophistication to structure a large loan against a Dubai property in deals where the property owner is an ex-pat or non-resident investor looking to raise debt against a primary residence, a trophy property, a holiday home or buy-to-let investment.

Lenders will usually offer up to 60-70% loan-to-value (LTV) against a property in an equity release Dubai deal. If you want a loan against a Dubai property for a relatively ambitious project or investment, some lenders may offer a slightly lower LTV. In other cases, we may be able to negotiate a slightly higher LTV by using multiple properties (in Dubai or abroad) or additional assets to support a higher loan amount. 

You may want a loan against property in Dubai as a means to access liquidity. Loans start at about the equivalent of £1 million up to £10 million, with, in theory, no upper limit on the loan amount, provided the value of the Dubai property is sufficiently high against the loan amount i.e. the LTV is around 60-70%). Lenders will want to secure the loan against a quality asset - a luxury property in a prime area with a liquid property market.

Using A Equity Release Loan Dubai

The lenders that offer equity release loans in Dubai usually take a holistic approach to lending. This means they can consider lots of different lending scenarios, including if you need to release equity from a Dubai property to cover a capital shortfall, gap in income, consolidate debt or cover unexpected liabilities or debts that need to be settled urgently. It’s important to note that while equity release loans in Dubai can be used to cover short-term gaps in income or pay liabilities, these must be of a non-critical nature: i.e., as a borrower you are facing a problem that you need capital to solve, but you are not facing bankruptcy, a serious financial difficulty or you are overstretched.  Equity release loans in Dubai are almost always used for strategic purposes and to avoid the selling of assets to raise the required capital, rather than as a last-ditch attempt to avoid insolvency or as a way to cover a more seriously distressed financial scenario. 

As long as you are a quality borrower (you have a good financial background, reputation and asset base), have a great asset (prime or luxury residential property) and you have a good exit plan and plan for managing the loan capital, equity release Dubai is usually an option. Because of their more flexible approach to borrowing, lenders don’t have prerequisite use cases for Dubai equity release - you can use this type of finance in almost any way, provided you can make a good case for lending.

You can use equity release Dubai to:

  • Pay a debt, consolidate debt or cover the cost of an unexpected liability
  • Purchase new property before an existing property has sold, or simply to add to your property portfolio
  • Finance the purchase of a property without a mortgage if you don’t want or can’t access a mortgage
  • Fund investments, high-ROI projects or invest in a business
  • Purchase assets or securities
  • Finance renovation work that will increase the value of your property

Equity Release Dubai

If you want an equity release loan in Dubai, you will usually need to own your property in a corporate structure. This facilitates the execution of the transaction for all parties, making it easier and faster to complete from a legal perspective. Lenders will usually prefer that the corporate structure be handled by a corporate service provider or other qualified advisers rather than the UBO or other non-qualified individuals, which means the structure is likely appropriately set up and administered. It also often makes it easier to consider tax, limit risk, and optimise the flow of loan capital (especially if you want to use the capital outside Dubai). Lenders will be able to transact in deals where there are multiple entities - for example, the asset that’s used as security will be domiciled in Dubai, but the borrower is a UK or US-limited company. 

Some lenders may offer equity release Dubai in your own name, but these will usually be for small loans - high-value equity release deals, especially against villas, penthouses, luxury flats and other large residences will exclusively take place through corporate entities. 

Although LTV is limited to around 70%, there is no upper limit on the amount you can borrow in an equity release Dubai deal, provided you have a solid case for borrowing, can meet the lender’s lending criteria, can document your exit and how you will manage funds. Loans of around AED 4 million (around £1 million) or more are very possible, with very high-value equity release loans in Dubai possible up to and above AED 40 million (£10 million).

Lenders are often flexible in their approach to how you will use an equity release loan in Dubai, and they understand that expat property owners will have international interests, as will foreign investors, who aren’t resident in Dubai. As a result, lenders will usually allow you to use the loan capital abroad, although you’ll of course be able to use the finance in Dubai if you wish. Wherever - and whatever - you want to use a loan against property in Dubai, you’ll need to lay out your plans in advance with lenders and explain how you’ll manage the funds and exit the loan. A foreign entity can also be designated to repay the loan if required. 

Equity release loans in Dubai come in various currencies to facilitate using the finance effectively, so you’ll be able to borrow in AED, EUR, CHF, GBP or USD - and potentially in other currencies if that is more convenient with regards to where you will use the loan. An independent valuation will need to be carried out to define the value of your real estate if you want to secure a loan against property Dubai.

Equity Release Dubai: Fees

Equity release in Dubai is more expensive than conventional property finance like a mortgage, but it is very competitively priced considering how flexible lenders are with what you can do with loan capital. Rates start at about 1% per calendar month, but the ambitiousness of your project, the amount you are borrowing, your plans for managing the funds, exit and other elements of the loan. It’s usually standard that there are exit and arrangement fees you’ll need to pay, as well as legal fees and any other associated costs - for example fiscal advice, corporate service provider fees and so on.