Buy your home wisely.

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 helps you save up money for other unforeseen and unavoidable circumstances. It can also help make a self-funded loan through rental income without having any burden on your disposable income. It also gives you immense flexibility to move for a better offer or pricing in case another bank is offering lower rates than your current home loan.

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Buy your home wisely.

What you buy is important. Where you buy is even more so. That's why the first rule of real estate is: location, location and location. Carefully consider things like the developer, the neighborhood and the distance to amenities like shops, schools and parks. These factors will not only help you live more comfortably, but will have a big effect on your property's sale and rental values in the future.

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Buy your home wisely.

Shorter tenor will result in less overall interest paid. When buying your home, don't stretch your financial commitment by unnecessarily extending your mortgage tenor. Although you will reduce your installments which makes you eligible for a higher loan, you will end up paying more interest overall, making your home more expensive to own in the long term.

Example: Villa price: 2.5 M
Mortgage (80%): 2 M
Down payment (20%): 0.5 M
Interest rate: 4.5%

Tenor	EMI	Total paid	Total Interest	Total Principal
25yr	11,117	3,334,994	1,334,995	2,000,000
20yr	12,653	3,036,717	1,036,717	2,000,000
15yr	15,300	2,753,976	753,976	2,000,000
10yr	20,728	2,487,322	487,322	2,000,000

As you can see in above table, compared to a 25 year tenor, a 20 year home loan is 29% cheaper and 15 year home loan is 77% cheaper on overall interest paid basis. For more honest advice on buying a home, get in touch with us.

For more honest advice on buying a home, get in touch with us.

Call 800 ENBD (3623)
SMS 'ADVICE' to 4454

MOU must be a comprehensive document outlining clear obligations of the buyer and seller. Document must be explicit and clear with regards to the fee payable to the real estate broker, Govt institutions, developer and lender respectively. It is suggested that MOU outlines a reasonable time frame to complete the transaction, especially when seller have a mortgage and buyer is also completing the transaction through financing. MOU must protect the buyer in the event of valuation amount falling short of the agreed sale price or mortgage approvals not coming through due to any reasons. MOU must ensure buyer is protected against any former legal disputes or claims made by the competent authorities or the developer which could halt the transaction. Particularly for rented properties MOU should highlight clear and transparent actions with regards to the possession and the future tenancy terms.

number of expenses which are payable by the buyer. Broadly such expenses can be classified as Bank, Developer, Dubai Lands Department and Real Estate brokerage charges. Whilst buying a property through mortgage financing, one must set aside minimum of 10% cash equivalent to the property value. These charges can vary hence best estimates are used;

illustration
Property value	2,000,000
Loan Amount 80%	1,600,000
Down Payment	400,000
Area	1,400

Bank Charges
Processing fee: 1%	16,000
Valuation Fees: AED 3,500	3,500
Insurance Premium:0.5%	8,000

Developer Charges
Service Charges [AED 15 Sq/Ft]	21,000
NOC Fees	5,000

Dubai Lands Department Charges
Registration Fees: 4%	80,000
Transaction Fees	4,000
Mortgage Registration Charge 0.25%	4,000

Real Estate Agent Charges
Commission:2%	40,000

Total Expected Cash	181,500
% of the property value	9%

An independent valuation 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 valuator. In some cases valuation price can be lower than the sale price which essentially means lesser financing and higher down payment. In order 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 incase buyer falls short of the expected financing amount. Market value ascertained by the valuators excludes transfer, brokerage fee, removable goods and furniture.