Mortgage the UK property to buy in Dubai? One of the first things to think about here is that the dirham is pegged to the US dollar. If, therefore, you were to borrow dollars against your sterling asset in the United Kingdom then it does appear to be a sound investment, especially because interest rates are lower than the six to seven percent amounts charged for dirham loans in the United Arab Emirates. However, and this is important – the investor shoud not forget that the sterling and dollar have an unstable and often unhappy relationship.

To explain this further: if an individual was to re-mortgage their house in London for eighty percent of its value in US dollars, and then the value of the sterling collapsed, then that individual would be obliged to repay the loan at a significantly higher value against the sterling property.
This scenario could become very negative if UK house prices fell, (which they suggest to be doing). If Dubai real estate prices fell then the individual with a UK mortagage plan could be in even more of a pickle. The fact is that in the normal 15 to 25 year mortgage agreement every borrower is bound to be caught out at some point.

Having researched this market JDP sees that a more ideal situation is to stick with local mortgages to buy Dubai property. This is recommended even if the individual has real estate in the United Kingdom to borrow against.

The main point to understand here is that by opting to borrow in a foreign currency against a UK property there is significant risk. Risk goes either way though. All the above can also be reveresed.