HSBC mortgage: full guide

A guide to HSBC bank mortgage offers, including their terms/conditions, typical loan offers, and application process with required documents.

Overview of terms and conditions

HSBC is a British multinational universal bank. It’s one of the largest banks in Europe and the world, with services in over 63 countries and territories. HSBC has been active in the UAE market since 1946 and is incorporated in Dubai. It is also regionally known as HSBC Bank Middle East (HBME). 

HSBC offers the following mortgage products: 

• Variable 3-month EIBOR Home Loan 

• Fixed Interest Rate Home Loan

• Green Home Loan for sustainable homes 

The following are the general terms and conditions for their home loans that apply to all mortgage applicants.

• Conventional loans only 

• Properties in Abu Dhabi or Dubai only 

• No minimum floor rate for variable-rate loans 

• No requirement for salary transfer 

• Minimum loan amount of AED 350,000

• Minimum salary of AED 15,000 

• Bank valuation fee: AED 2,625 

• Home loan liability letter: AED 52.5 

• For new home purchases, an arrangement fee on the total loan amount

  • Personal banking / Advance customers arrangement fee: 1.05% of loan amount, minimum of AED 5,250 (including VAT) 

  • Jade / Premier customers: 0.525% of loan amount, minimum of AED 5,250 (including VAT) 

• Partial settlement terms 

  • Up to 25% partial settlement allowed per annum

  • In excess of 25%: 1.05% penalty on the exceeding amount, capped at AED 10,500 (including VAT)

• Partial / full settlement fee-free terms: 

  • Fixed-rate loans: after the 7th year from when you receive the mortgage amount (loan drawdown)

  • Variable-rate loans: after the 3rd year from when you receive the mortgage amount (loan drawdown)

• Bank transfer fee - 1.05% penalty on the exceeding amount, capped at AED 10,500 (including VAT) 

• Life insurance terms 

  • In-house policy dependent on client profile

  • External life insurance assignable for a fee

  • Quotes provided

• Building insurance: 

  • Independent building insurance available

  • Based on rebuild value for villas and the mortgage balance for apartments

  • Quotes provided

• Down payment between 20-40% 

HSBC also periodically has special deals and offers that can help buyers minimize some of the additional mortgage costs. For example, they offer a credit card to cover the 4% DLD fees with 12 months of interest-free repayments. They also sometimes have offers that provide customers with valuation fee refunds after loan disbursal and discounted arrangement fees. 

Now let’s look at HSBC’s loan options for mortgage borrowers that are employed, self-employed, and non-residents. Keep in mind that these rates were updated on January 4th, 2023, and may change without notice. The 3-month EIBOR rate is from the UAE Central Bank website and is current as of January 19th, 2023. EIBOR rates are updated every day and follow fluctuations in the market.

Mortgages for employed borrowers

If you don’t already have a current account and are a UAE resident, upon loan approval, HSBC will arrange the necessary account for your loan repayments. When it comes to mortgage loans, HSBC offers more favorable interest rates to their customers with higher status. Let’s first look at what it means to be either a Premier or Advance client. 

To be deemed a Premier client one of the following must be true:

• Have an HSBC mortgage with a drawdown of AED 3,000,000 or above for the first 24 months, after which another eligibility criteria must be met

• Maintain a total relationship balance of AED 350,000 in deposits and/or investments

• Deposit an ongoing individual monthly net income of at least AED 40,000 into your account

• Already hold and qualify for an HSBC Premier account in another country/region

To qualify as an Advance client you must either have a minimum monthly salary of AED 15,000 transferred to an HSBC account or a minimum monthly average balance or AED 100,000 in deposits and/or investments. 

Now we can go ahead and take a look at their loan offers (keeping in mind that the listed rates could change at any time). 

‍Fixed-rate offers:

• Fixed for either 1, 2, 3, or 5 years 

• A reversion rate of a fixed margin + 3-month EIBOR

Variable-rate offers:

• For Premier clients

  • 1.3175% margin for the mortgage term + 4.652% (3-month EIBOR) = 5.9695%

  • Bank processing fee: 0.25% of loan amount 

• For Advance clients 

  • 1.4675% margin for the mortgage term + 4.652% (3-month EIBOR) = 6.1195%

  • Bank processing fee: 0.5% of loan amount 

• For Personal Banking clients

  • 1.5675% margin for the mortgage term + 4.652% (3-month EIBOR) = 6.2195%

  • Bank processing fee: 0.5% of loan amount

The Green Home Loan is specifically offered to finance the purchase of sustainable homes. You can automatically qualify if the property you’re buying is LEED Platinum or Gold certified. Otherwise, you can submit your property for review by HSBC’s sustainability team. They will take into account solar panels (and if they cover a significant part of the energy demand), highly efficient AC systems, water saving measures, building/community waste management systems, and more. 

Here are the terms and conditions for the Green Home Loan:

• 0.25% off standard rates 

• For Gold/Platinum LEED certified properties: 100% discount on applicable arrangement fees

• Available on the Variable 3-month EIBOR Home Loan

Other conditions for employed borrowers:

• Service fee: AED 5,250

Mortgages for self-employed borrowers

Self-employed borrowers can also get access to the loan offers and conditions that are listed above for employed borrowers. The interest rates will still vary depending on the client’s designation. Like most banks, HSBC will require additional documentation from self-employed borrowers to make sure they are financially stable.

Mortgages for non-resident borrowers

As a non-resident borrower, you may still be eligible for a mortgage from HSBC; however; you must be a Jade or Premier customer or be otherwise eligible for an account for your home loan repayments. Non-residents could still qualify for their variable-rate home loans or the Green Home Loan. It’s important to note that HSBC will more than likely have different rates for non-resident borrowers. At Kredium, we can help you figure out the possible loan offers you could get from HSBC and other banks in the UAE. As a non-resident, it’s especially important to shop around and compare your offers due to the higher rates you’ll be offered. We can help you find the best offer faster and easier. 

‍Other conditions for non-resident borrowers:

• Minimum down payment of 40% 

• Higher interest rates 

• Service fee: AED 7,500 

Application process

The first page of the HSBC mortgage application form is below. It can be beneficial to get in touch with a
mortgage broker to get help with the application and ensure that you fill it out accurately and completely.
‍

You’ll also need to submit a series of documents so that HSBC can thoroughly examine your financial situation and approve you for a mortgage loan.

HSBC provides limited information on the exact documents that borrower’s need to provide for their mortgage application. While some of the standard documents are listed above, you’ll probably need to provide others as well. Learn about the mortgage documents you’re likely to need when applying for a mortgage from any bank in the UAE as a national, expat, or non-resident.

To sum up

HSBC is a reliable bank that provides mortgage borrowers in the UAE with favorable rates and unique options such as their Green Home Loan. While you now have a general idea of the rates you can expect, their conditions and actual offers will still vary based on each borrower’s financial situation. By utilizing a mortgage broker like Kredium, our experts can search among multiple banks in the UAE to provide you with personalized loan offers that you can easily compare. We can help you from your property search and pre-approval all the way to finalizing your mortgage loan. You can also estimate your monthly payments with a mortgage calculator and become an informed buyer by reading our helpful blogs. All you need to do is register on our website or contact us to start getting professional guidance.