If you are planning to move to UAE, whether for a job or starting a new business, you might be considering buying a property, instead of living on rent and rightly so with rents on the rise. Also the 2002 freehold property law, allows you to own a property in UAE in designated areas.
To make it simpler for you, we have put together ten essential tips for buying a property in the UAE.
Weigh all the pros and cons- Buying a property will probably be one of the biggest decisions in your life. So, you need to weigh out all the pros and cons before you consult with any developer or a dealer.
Location- Location is the most important factor you must consider when thinking of buying a property in UAE. You need to find that perfect place that suits you and your family needs.
These are the key pointers you need to bear in mind while selecting the location-
- The distance between your workplace and the said location
- Supermarkets, malls and pharmacies nearby
- Schools and parks in the locality (if you have children)
- The overall community in the area
These factors will not only help you live more comfortably but will have a significant effect on your property's sale and rental values in the future.
Type of property - You can either go in for an off-plan (under-construction property from a developer), a ready to move in new property or a resale property from a private owner. Depending on your purpose of buying (for investment purposes or for living in yourself) and your capital availability, you can select the type of property best suited for you.
Property search- Once you have zeroed in on your location and type of property you are looking for, let us head to property search. If you are planning to buy a ready apartment, it is advisable to hire a registered broker who can take care of all the paperwork for you. You can check the broker's license on Dubai land development website. The broker will show you all the excellent properties in your budget and the area you have selected. For off-plan property, it is essential to check the reputation of the developer, his previous properties, the ready show apartment and the overall pricing scheme offered by him.
Finance- Whether you are a salaried individual or a self-employed, you can avail the home loan financing option of up to 75% with Emirates NBD. We also offer pre-approvals, so you don't waste time finding a suitable property, only to realize later that you don’t have the necessary funds to go through with the deal.
Down payment- A higher down payment on your home now, means lower total payments on your home. Loan to value (LTV) is a financial term used by lenders to express the ratio of a loan against the value of the home. While it's tempting to apply for the highest LTV, it is advisable to pay a higher down payment and opt for a lower LTV; this helps in ensuring that future payments are manageable and also enables you to save up money for other unforeseen and unavoidable circumstances.
Ideal Tenor- Dubai has a maximum mortgage tenor of about 25 years. However, many people opt for 10 or 15 years payment scheme. It is advisable to go for a shorter tenor as Shorter tenor will result in less overall interest paid.
Sale agreement- For off-plan housing, you need to submit a document to the developer mentioning the terms and conditions agreed upon along with the date of completion specified by the developer. In case the developer fails to hand over the property as per the date mentioned, you are liable to get a refund of 5 to 15% of the initial down payment. When opting for a secondary sale, an MOU is registered with the Dubai Land Department. MOU must be a comprehensive document outlining clear obligations of the buyer and seller. It must clearly state the fee payable to the real estate broker, Government institutions, developer and lender respectively.
Calculation of cash required in totality- Make a list of the total number of expenses which are payable by you. Broadly such costs can be classified as Bank, Developer, Dubai Lands Department and Real Estate brokerage charges. While buying a property through mortgage financing, one must set aside a minimum of 10% cash equivalent to the property value apart from the down payment.
Property valuation- An independent assessment of the property is mandatory by the banks empanelled valuators. Finance amount is calculated by the lender based on the valuation amount provided by the evaluator. In some cases, valuation price can be lower than the sale price which essentially means lesser financing and higher down payment. To avoid such situation; one must include an exit clause in the MOU to mitigate such risk which could also protect the buyer from losing their initial deposit in case buyer falls short of the expected financing amount. Market value ascertained by the valuators excludes transfer, brokerage fee, removable goods and furniture.