What is a Commercial Mortgage?
A commercial mortgage is a loan secured by property intended for business use, such as office buildings, retail stores, warehouses, or industrial facilities. Unlike residential mortgages designed for personal housing, commercial mortgages are specialized for business properties. Further, commercial mortgages rates differ from residential mortgage rates.
Types of Commercial Mortgage
Commercial mortgages are categorized into two main types: owner-occupier and commercial investment mortgages.
An owner-occupier commercial mortgage is utilized when acquiring a property intended for business use, where revenue is generated through the business operations conducted on-site.
On the other hand, a commercial investment mortgage is employed for purchasing properties that will be leased out, with income primarily derived from rental returns.
– The maximum Loan-to-Value (LTV) ratio permitted in the UAE is 80%.
– A 20% initial down payment is mandatory.
– The maximum tenure for a commercial mortgage loan is 15 years.
– Fixed interest rates are generally not offered for commercial property mortgage loans.
– Mortgage rates for commercial properties typically exceed those for residential properties.
Banks that Offer Commercial Mortgage:
Emirates NBD –
-Offers finance for up to 7 Million
-Loan to Value of up to 60%
Mashreq –
-Finance up to 10 Million
-Self employed only
-For UAE Nationals and Residents
Abu Dhabi Commercial Bank (ADCB) –
-Finance up to 10 Million
-Up to 2 Million Equity Refinance
-Flexible Loan tenure
Ajman Bank –
-Finance up to 10 Million
-Length of Business should be minimum 2 years for self employed
Dubai Islamic Bank (DIB) –
-15 years flexible tenure
-Finance up to 70% of Property Value
First Abu Dhabi Bank (FAB) –
-High loan amount
-Flexible payment options and terms
Emirates Islamic Bank –
-Up to 60% finance
-Repayment of up to 15 years
-Up to 10 Million finance amount
-Completed properties in Dubai and Abu Dhabi
Benefits of Commercial Mortgages in Dubai
1. Ownership and Long-Term Investment
– Control over Property: Commercial mortgage allows businesses to acquire property, providing ownership and control over their premises.
– Long-Term Investment: It serves as a long-term investment, offering potential appreciation in property value over time.
2. Financial Flexibility
– Leverage: Businesses can leverage their existing capital by financing the property purchase through a commercial mortgage.
– Cash Flow Management: Structured repayment plans enable businesses to manage cash flow effectively while retaining liquidity for operational needs.
3. Tailored Financing Options
– Flexible Terms: Lenders in Dubai offer customized terms and conditions tailored to the unique needs of businesses, including loan amount, repayment schedule, and interest rates.
– Varied Property Types: Commercial mortgages cover a range of property types, accommodating diverse business requirements from retail spaces to industrial complexes.
Commercial Refinancing Mortgage
Commercial refinancing mortgages involve taking out a new loan to replace an existing one, typically to secure more favorable terms, lower interest rates, or unlock equity.
The loan-to-value ratio depends on the new lender’s policies. Refinancing can greatly enhance cash flow by lowering monthly payments or tapping into the property’s equity. This option is ideal for property owners aiming to strengthen their financial strategies and benefit from improved mortgage conditions.
Benefits of Commercial Mortgage Refinancing:
Access to extra funds by unlocking existing equity
Enhanced cash flow through better loan terms
If you’re considering expanding or refinancing your commercial property in the UAE, now is the time to explore your mortgage options. Our easy-to-use Dubai mortgage calculator can help make your mortgage journey a breeze.
Our expert team can also guide you through the process, ensuring you get the best rates and terms for your business goals. Contact us today for a personalized consultation and take the next step toward financial growth and success!
Related Article:
1. Impact of Credit Score on your Mortgage Application
2. 5 Questions a good Mortgage Broker can answer.
