Understanding the Mortgage Valuation Process in Dubai
If you are buying property in Dubai with a mortgage, one of the first key steps in the financing process, after signing your MOU/Contract F, is the property valuation.
This is an independent assessment of the property's market value carried out on behalf of the bank. The valuation helps the lender determine how much they are willing to finance and ensures the property provides sufficient security for the loan.
Protect yourself in the contract
Before you start skimming through this page, the most important thing you need to do regarding valuations is to ensure your contract protects you in the event of a down-valuation.
We don’t want you to end up in a situation where the property comes in drastically undervalued with no exit from the contract.
Good agents will add this clause to the contract as standard, but it’s important for you to ensure it’s there. You, as the signer of the contract, hold liability for anything written within, and Dubai Courts will not hear “my agent told me we would be fine”.
Generally, we have a percentage in mind. If the property comes through X% lower than the purchase price, we can:
Challenge the valuation
Renegotiate the purchase price
Exit without penalty
Common percentages are 10%, 5%, 3%. Some will opt for 2% or 1%. It is very difficult to have a clause for 0%, as the seller must agree to this clause too.
This obviously comes down to your affordability and available cash on hand.
Why property valuations are required
Banks require a valuation to verify that the price agreed between the buyer and seller reflects the property's actual market value. Since the property acts as collateral for the mortgage, lenders need to confirm that the asset is worth enough to cover the loan if necessary.
Because of this, banks do not rely solely on the purchase price or the listing price. Instead, they appoint an independent valuation company to provide an objective estimate of the property's value.
Appointment of an independent valuer
Once a buyer has obtained mortgage pre-approval and signed a memorandum of understanding (MOU)/Contract F for a property, the bank will instruct a valuation company from its approved panel. The valuer is independent from both the buyer, the seller and the bank.
Cost of an independent valuer
The cost of the valuation is usually paid by the borrower and is typically in the range of AED 2,000 to AED 3,000 + VAT for most residential properties.
Once the inspection is complete, the valuation fee is non-refundable.
The property inspection
During the valuation process, the valuer gathers detailed information about the property. This may involve a physical inspection or, in some cases, a desktop valuation based on available data.
The valuer will review factors such as:
The size of the property
The building and location
The condition and age of the unit
Layout and amenities
Parking availability and views
Any upgrades or modifications
They also analyze recent sales of comparable properties in the same building or nearby communities to determine a fair market value.
The valuation report
After completing the inspection and analysis, the valuer submits a detailed report to the bank. This report includes the estimated market value of the property, a description of the property itself, and evidence from comparable transactions used to support the valuation.
The bank uses this report to determine the loan amount it is willing to offer.
Some banks will immediately share this report with your or your mortgage broker, others may not. In these instances you can directly request a copy of the report to be shared with you.
Loan-to-Value and how it affects your mortgage
The final loan amount is calculated using the Loan-to-Value ratio (LTV), which is the percentage of the property's value that the bank is willing to finance.
Importantly, banks will use the lower of the purchase price or the valuation amount when calculating the loan.
For Example:
“If your LTV is 80%, meaning you are borrowing 80% of the funds required to purchase the property and a property is being purchased for AED 1,000,000 but the bank values it at AED 900,000, the LTV will be applied to AED 900,000.
In this instance the bank will only offer 80% of 900,000 meaning the buyer would need to provide a larger cash contribution to complete the purchase.
”
“If the property is being purchased for AED 1,000,000 but the bank values it at AED 1,100,000, the LTV will be applied to 1,000,000.
In this instance, the bank will offer 80% of 1,000,000”
What documents are required?
Depending on the case type, different documents are required.
If it is a standard title deed resale, the following is required:
Title Deed
Contract F/MOU
Floor Plan
Sellers Emirates ID & Passport
For Oqood & Pre-Title Deed cases, additional documents will be required:
Sale and Purchase Agreement
Building Completion Certificate
Statement Of Accounts
Handover Notice
Who will attend the valuation?
The valuation appointment can proceed with just the inspector from the valuation company if access is provided.
It is pretty standard for one of the real estate agents to attend.
On request, the buyer can also attend, but this is not standard, nor is it requested from the agent’s side. If the buyer would like to attend, they must request it. It is possible, and allowable, for the seller or tenants to reject this request.
What happens after the valuation
Once the valuation is complete and accepted by the bank, the mortgage application can move to final approval.
It’s important to remember that:
If the valuation comes in higher than the purchase price
The bank will offer the LTV of whichever is lower - the MOU/Contract F or the valuation report
Dubai Land Department reserves the right to charge the 4% transfer fee on whichever is higher
If the valuation comes in lower than expected
You have a number of options:
Increase the down payment made
Exit the contract if it allows
Challenge the valuation
Explore financing options with other lenders
Typical timeline
In most cases, the valuation process takes approximately a week:
48 hours from payment to receive the call
1-2 days for the appointment
48 hours for the report to be received
These times may vary, and other factors can affect timelines. Tenants may need to approve a time, the valuation company may be busy. Processing times can vary, etc. But generally, we are safe to allot 1 week from start to finish.
Final thoughts
The valuation process is a routine but important step when purchasing property with a mortgage in Dubai. It provides an independent assessment of the property's market value and ensures that both the bank and the buyer are making a well-informed financial decision.
