Buying a home will be the most important financial transaction you’ll make in your life
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You’ve always wanted to own your own home in Dubai but never\nthought you could? Well, now is the best time to buy in years, according to\nproperty experts. With falling house prices, plans to extend visas to ten years\nand an ever-growing list of new developments coming onto the market, this is\nthe ideal time for house hunting.<\/p>\n\n\n\n
Purchasing a home is going to the most important financial\ntransaction you’ll make in your life. If you’re looking to become a homeowner,\nyou’ll likely be considering a mortgage to help you finance the purchase.<\/p>\n\n\n\n
Here\u2019s a helpful checklist backed by the experts to make the\nprocess smooth sailing.<\/p>\n\n\n\n
Understand\nthe market<\/p>\n\n\n\n
Getting to\ngrips with the workings of the UAE real estate market is obviously going to put\nyou on a surer footing. \u201cThe property market here is very different to other\ncountries, so making sure you have a real estate agent you trust to guide you\nthrough the process is essential,\u201d said Naval Vohra, CEO of Dubai brokerage\nAppello Real Estate. \u201cThey can guide you on fees, paperwork, and rules and\nregulations \u2013 this will save you time, money and reduce worry as you take the\nplunge with a mortgage.\u201d<\/p>\n\n\n\n
Another\nexpert to get solid advice from is a mortgage broker as they have access to all\nthe banks and \u2013 for a nominal fee \u2013 will give you impartial advice on the best\nproducts and compare lenders for you. Mortgage brokers will also offer\nexclusive promotions from banks that you wouldn’t get if you went directly.<\/p>\n\n\n\n
\u201cFor\noff-plan, developers offer payment plans where 100 per cent of the purchase\nvalue is either paid pre-handover or a proportion is paid pre-handover and the\nbalance paid after completion,\u201d explains Joanne Phillips, senior mortgage\nmanager at consultancy Home Matters.<\/p>\n\n\n\n
\u201cFor pre-handover payment plans, the mortgage availability will\ndepend on the type of payment plan. If the payments are due while under\nconstruction, the banks will only lend up to a maximum of 50 per cent and the\nbuyer would be required to pay the first 50 per cent.<\/p>\n\n\n\n
\u201cHowever, these types of payment plans are now rare as\ndevelopers, in order to remain competitive, are offering payments plans where\nthe majority of the purchase price is due on hand-over. For ready properties,\nbanks consider lending based on the UAE lending caps \u2013 for example, 80 per cent\nloan-to-value for UAE nationals and 75 percent for expats.\u201d<\/p>\n\n\n\n
Experts also say it\u2019s vital to understand all fees tied to your\nmortgage, particularly early settlement or transfer fees as well.<\/p>\n\n\n\n
Some banks\nwill give a slightly preferential mortgage rate if you undertake a salary\ntransfer to them.<\/p>\n\n\n\n
A salary transfer not only means your salary will be credited to\nthe account you opened with your home loan but also means that your employer\nwill give an undertaking to the bank that if you were to leave employment, any\nend-of-service gratuity would go to the bank where the salary transfer is being\nmade.<\/p>\n\n\n\n
Ensure when\nyou get offers that everything is put in writing. \u201cDon\u2019t sign any paperwork\nwithout having read and understood it properly,\u201d advises Keren Bobker, an\nindependent financial advisor at Holborn Assets. \u201cProfessional advice is worth\npaying for as mistakes can be very costly.\u201d<\/p>\n\n\n\n
A key factor\nin determining whether someone can afford a mortgage is their debt-to-burden\nratio, calculated by the bank by adding all their existing liabilities, which\nshould not exceed 50 per cent of the monthly salary, adds Bobker. Additionally,\nfive per cent of all credit card limits is added to the tally as well because\nbanks calculate a borrower’s affordability based on their limits and not the\noutstanding balance. If you have a lot of credit cards, it\u2019s worth considering\nreducing them before taking out a mortgage.<\/p>\n\n\n\n
\u201cBefore you\ncan even look at properties, you need the money for the deposit and all the\nassociated fees,\u201d says Bobker. \u201cFor a property priced at up to Dh5 million,\nexpats will need a deposit of at least 25 per cent and need to allow up to\nanother eight per cent for fees and charges. Land registry charges alone can be\nfour per cent of the price, although this varies by emirate.\u201d<\/p>\n\n\n\n
Finally, when it comes to buying a property the real estate\nagent will ask for a 10 per cent deposit upon signing the memorandum of\nunderstanding (MoU), which is the contract between the seller and you. This\ndeposit is usually held with the agent and not cashed but exchanged for a\nmanager’s cheque on the day of transfer.<\/p>\n\n\n\n
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Buying a home will be the most important financial transaction you’ll make in your life You’ve always wanted to own your own home in Dubai but never thought you could? Well, now is the best time to buy in years, according to property experts. With falling house prices, plans to extend visas to ten years and an ever-growing list of new developments coming onto the market, this is the ideal time for house hunting. Purchasing a home is going to the most important financial transaction you’ll make in your life. If you’re looking to become a homeowner, you’ll likely be […]<\/p>\n