Time to buy: The basics of financing your property

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Dubai is one of the most exciting cities in the world, and although house prices are down since the peak of 2014, there are clearly deals being done and the city continues to attract significant investment to its property market.

In certain key communities we have seen very positive sales in the first quarter of 2018 continuing through the summer months. This is great news and on the back of a four year decline, I believe it’s one of the best times to buy.

But how can you get a piece of the action? We’re reading a lot on the benefits of owning versus renting. Not only is their psychological and emotional gains to owning a property anywhere in the world, in Dubai in key communities, especially in the secondary market right now, it can be extremely financially rewarding to do.

And if you have decided now is the time to purchase your own property on finance, choosing the right mortgage to ensure you get the most for your money, and know what you can afford it, is critical.

Are you eligible for a home loan?

Most loan providers will require you to demonstrate that you have a regular income stream and would prefer that you have a fixed salary, rather than the uncertainty of a commission only role. This is because commissioned work doesn’t have the same stability that a salary does. The minimum salary limit is set on average at around Dh10,000 per month, but this does vary.

Which documents do you need?

As a minimum, you will need to provide a valid passport, your Emirates ID and a valid visa with valid residence. You will also need your latest salary certificate and six month’s worth of pay slips and bank statements, also proof any outstanding liabilities within the UAE. This will be required for single applicants and where joint incomes are being taken into account.

For those self employed or owning their own business, the bank requires certain documents to prove the income of your company. But this can vary depending on how the company is structured and how you manage your financial accounts. The are many banks offering finance mortgages for self employed people with lots of different company structures.

What to look for when choosing a home loan?

There are four basic product-based criteria that we suggest you should consider when choosing a home loan.

1) Your rate now: Is it fixed or variable and how is it structured?

2) Your future rate: Is there an introductory rate and if so when will this change and what might it be in the future?

3) Costs: Is there an arrangement fee and if so how much? Are there any costs related to insurance (home or life)?

4) Flexibility: Can you make overpayments without penalty? What happens in you overpay? Can you reduce term or reduce monthly payment?

Even with this criteria in mind, finding the right mortgage for you can still prove a daunting process. However, the online platform Mortgage Source could offer some help. Instead of trying to work your way around the internet, entering your details over and again, Mortgage Source allows you to directly compare the banks and home loans that could be suitable for you, and you only need to put your details in once. More than just a comparison site, Mortgage Source actually looks are your individual circumstances and only offers loans relevant to you.

Always seek advice

If you are new to property and have never had to deal with finding a loan of this size before, you should indeed seek help from a professional and see what platforms exist in the market, like Mortgage Source, to assist your initial search.

Transaction fees

You must remember to look at transaction fees too. For example, there are some additional fees for mortgages relating to the banks and Land Department.

Some the transaction fees you should take note of when buying in Dubai:

Property registration fee to DLD: 4% of the property purchase

Agent fee: 2% of purchase price

Mortgage processing/arrangement fee: from 0% to 1% of the loan

Mortgage registration fee to DLD: 0.25% of the loan amount plus Dh290

Valuation fee: Anywhere from Dh2,500 to Dh3,000 for most residential properties

Oqood fee: Off-plan property buyers must also pay a four per cent fee

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