BUYER’S GUIDE
Copyright 2015. Ocean View Real Estate
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If you have decided to invest in a property in the UAE, there are some important things you must have in place before starting the process. With this guide to buying property, you will be able to keep ahead of the process and make sure you are fully prepared to own a property in the city.How to get started
If you are employed you need to make sure you have the below documents ready before starting your mortgage process.
Passport copies with visa page
Original salary certificate (including, date, employee’s name, date of joining, passport number, nationality, date of joining, gross monthly salary & breakdown, annual bonus, current residence in the UAE, name of authorized signatory and company stamp).
6 months pay slips if applicable 6 months bank statements
last 3 months credit card statements copy of current DEWA or ADEWA bill Copy of tenancy agreement
Copy of existing finance agreements Signed MOU
If you are self-employed, your mortgage process differs from the one for those employed by a company. Make sure you have all of the below documents in hand before starting to process.
Passport copies with visa page
Copy of your Memorandum and Articles of Association Copy of your Trade License
3 years audited accounts
1 years company bank statement 6 months personal bank statements last 3 months credit card statements copy of current DEWA or ADEWA bill Copy of tenancy agreement
Copyright 2015. Ocean View Real Estate
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How to get a mortgage in the UAE:
There are a couple of steps to go through in order to secure a mortgage in the UAE.
Firstly, go to the bank to get a pre-approval for your mortgage from the bank. This is when the bank will assess your background, income and financial prospects before offering you a certain amount of money in form of a mortgage. You can then search for a property in this price range.
Once you find a property you would like to buy, you need to sign a Memorandum of Understanding with the seller, and your property agents. This is when a time frame for the property exchange is agreed and a deposit (usually 10%) is held with the seller’s agent, only to be cashed if the buyer pulls out of the deal.
The buyer must then send the signed MOU and passport copies to the bank to get a final approval letter.
The buyer then needs to issue cheques for the valuation fee, where the buyer has to hand over three to four undated monthly installments along with one cheques totaling the amount of the value of their property. After the bank receives the valuation fee, they will issue the buyer with the final letter of approval to go ahead, with the whole process normally taking five working days.
Once the NOC is issued the bank or the agent need to register the transfer with the DLD (Dubai Land Department) office. The down payment then has to be paid and the registration fee, which is 4% of the value of the home, plus AED315 admin fee. When all of the above has been completed the DLD will issue the new title deed. The buyer then pays the agency fees and gains the keys to their new home in Dubai.
How much can I borrow?
The maximum amount of money you can borrow for a mortgage is 75% of the price of the property, if under AED5million and only 65% if over AED5 million. This means the remaining percentage has to be given as a deposit on the property.
For expats wanting to own a property in Dubai, the maximum amount they can borrow from a bank is seven times their annual salary, according to their current salary certificate.
Copyright 2015. Ocean View Real Estate
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Extra expenses to bear in mind
Most lenders will add on a 1% fee for processing the mortgage.
If you are using a mortgage broker, they will charge a fee for their services.
Agency fees have to be paid upon completion of the deal, normally to the amount of 2% of the value of the property.
If you are buying a property off plan you will have to pay an extra 4% to the Dubai Land Department.
If the property you are buying is via mortgage, you need to pay 0.25% of the value as a mortgage registration fee.
Make sure you also know the community fees and whether you have to pay a full year when you move in, or only part of the year.
Reconnecting utilities, such as water, gas and electricity, costs money, anything between AED1000 to AED5000.
What type of mortgage should you choose?
You can either opt for a fixed rate mortgage or a variable mortgage.
A fixed rate means the agreed interest rate is fixed and cannot be changed for a certain period of time, normally two years. A fixed rate is better in struggling economies, as the buyer knows their interest rates will not increase.
A variable mortgage means the interest percentage agreed can fluctuate, meaning sometimes it will be lower than agreed and sometimes higher.
Who governs the real estate agency in the UAE?
RERA, the Real Estate Regulatory Agency, is in place to make sure the property industry in the UAE remains stable and controlled. Part of Dubai Land Department, RERA makes sure that developers, real estate agents and property brokers are monitored and regulated, in the interest of the people of the UAE. They are on hand to help with any property enquiries or issues and can be contacted on +971 04 203 0555 or via the DLD website
www.dubailand.gov.ae.
Some final tips to bear in mind before buying a property in Dubai:
Make sure you are financially stable enough to have a mortgage Make sure you know the process before starting
Copyright 2015. Ocean View Real Estate
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Research all areas and buildings before buyingDo find out community fees before buying Invest in legal advice
Find out the financial situation of the seller, as this comes into play when buying a property in Dubai.
Don’t buy off plan from unrecognized developers
Check your real estate agent’s RERA registration before proceeding Do speak to your bank before embarking on a property hunt. Make sure you can afford the monthly repayments
Do research whether you would prefer a fixed rate or variable mortgage. Decide with your head and not with your heart.
