Nobody loves to rent their money, but moving from the tenant to homeowner is a big move and a significant financial factor. Highly successful in many areas, Dubai does not typically want to fall below first place. Still, the Mercer 2020 Cost of the Living survey focuses differently by comparing lifestyle expenditures in 500 cities worldwide. The Emirate reached 23rd place with the report’s writers assigning competitive compensation packages, lower real estate prices and good security standards as important causes.
5 RESULTS TO BUY
- There are now significant value decreases in recent pricing reductions
- Low-interest rates mean low refunds (often lower than renting)
- Equity on sale (paying down the mortgage and hope of capital growth)
- You can rent it out and generate an income if you leave.
- You can refurbish and refurbished to enhance the value
Is it a good time to purchase?
“The decision to purchase a property is personal and usually depends on family, job and financial circumstances. If you have the money for a deposit and are able to pay back – notwithstanding last year’s uncertainties – the evidence suggests that this is now a perfect moment to purchase,”. “Prices in Dubai have continued to plummet, but the demand is rising, and as I write about this at the end of 2020, prices in key communities — particularly villas – are showing indications of recovery. I advise purchasers to evaluate their personal circumstances prior to purchases, although we may see signals of a market stability after six years of price decreases in Dubai. I would expect anyone who buys today – medium- to long-term – to look forward to good wealth gain in the years to come.”
What other benefits are there?
“There’s nothing like having your own home calling property. With six-year prices, plus interest rates falling by 25 percent over the previous year, many renters will find their monthly payments decreased when they buy a property and switch to a mortgage. The key benefit is that in the following years you will invest in your own assets instead of paying out the hypothesis of someone else.”
Have the mortgage deposit requirements changed?
“Yes, in March 2020, the UAE government dropped the LTV requirement to 80 percent for first time buyers, thus you may now acquire a 20 percent deposit loan. It was 25 percent before. Some banks will also include all extra charges in the loan amount, so that the total down payment is 20 percent. A competent mortgage broker should always be consulted about which banks give the best rates and what their LTV requirements are. The fixed-rate mortgage options (typically up to five years in advance of a variable-interest rate) are currently valid for a duration up to 25 years, ranging from 3-4 percent.”
Your deposit is not the only financial expense that can be included in your budget, with several upfront charges and associated purchasing costs. These amount to approximately 7% of the total purchasing price and include:
- 4% Dubai Department of State (DLD) transfer fee (based on total property purchase price)
- DLD mortgage registration fees of 0.25 percent (percent of the total house loan agreement) + Dhs290 admin fees
- Dhs2,000-4,000 registration charge for property (dependent on the value of the property)
- Dhs2,500-3,000 property assessment charge
- Installation of bank hypothecs (could be zero, or anywhere up to 1 percent of the total loan amount)
- 2 percent Immobilize Broker Fee
Take a clean sheet of paper, sharpen a pencil and ask questions:
How much time do I plan to remain here?
If it is only a few years or your employer could relocate to you, and the idea of renting your house sounds like too much work, keep up with the rental.
Can I afford it?
What’s your job stable? It is theoretically less dangerous if you have a steady income and your firm is performing well. Warning Word: your mortgage is associated with your residence, thus if you leave Dubai, your mortgage must either be paid off (cash/house sale), or you must renegotiate the conditions with the bank (if you want to rent it out, for example).
Can I afford the deposit down?
The first barrier is the usual 20% upstream payment (a significant amount for any investment in any market) and the mortgage reimbursement. Personal loans cannot be utilized to finance property investment payments in the UAE.