Ask the Agent: Investing in Real Estate

What you should know about buying property in DubaiDhiren Gupta

I bought a flat in Abu Dhabi years ago. I feel that I am paying my current lender a higher interest rate. Can I switch to another bank? What are the costs?

Surely, it would be a smart decision to move to another lender if you are paying high interest rates. As per UAE Central Bank mortgage regulations, banks have homogeneous exit fees. They charge only 1% of the outstanding principal balance or Dh10,000, whatever is less, to fix the amount. It would be prudent to consider a valuation of your existing facility and check with lenders to refinance and get a better rate. Most banks offer reduced or zero processing fees if you want to buy out an existing loan. You also need to check your property’s current market value as the new lender will lend against the current value. If your loan is higher than lending parameters, you have to pay extra from your own pocket; if it falls below, you can easily move out to another bank by only paying the settlement charges.

My wife and I have a combined monthly income of Dh70,000. We both do not have liabilities. How can we avail ourselves of a mortgage?

Both applicants can apply for a loan together to enhance the loan eligibility amount. Considering that there are two different modes of income, the requirement would be as per what is applicable for salaried and self-employed individuals.

The bank would conduct due diligence for assessment. The loan tenure would be calculated as per who is older if you want to apply for maximum tenure.

The bank will open a joint bank account for the mortgage. It will debit the monthly installment from that account.

So, definitely, you can apply for a joint mortgage. The process and documents required will be different from that of a single mortgage holder, but the loan eligibility will be decided after calculating your combined income.

I bought a Dubai property and secured a 70% mortgage, but I am planning to sell it. Should I pay off the mortgage before property transfer?

It depends on the type of buyer you have. The buyer might be interested in paying cash and registering the property in his name. However, if the buyer wants to avail himself of a mortgage, the buyer’s bank would settle your current liability in your bank. The buyer needs to get a pre-approval from his bank. You need to provide a copy of the title deed or sale and purchase agreement, floor plan and signed MOU to the buyer’s bank for market valuation. Upon final approval, apply for a liability letter and provide the same to the buyer’s bank. Upon attaining the required original property documents, both parties need to apply for an NOC at the developer’s office. The bank would pay the outstanding balance at the Land Department. A new title deed would then be issued in the buyer’s name and would be with the bank until the loan is settled. This takes around 10 to 12 working days.

I am working in the US and my monthly salary is USD8,000. I am looking to get a mortgage for a Dubai off-plan project. What are my options?

Banks offer mortgage to off-plan projects in Dubai, but not every lender offers such to clients.To qualify, the client needs to contribute the initial 50% of the down payment towards the property; the remaining 50% will be paid by the bank as per the payment schedule in the developer’s escrow account. Considering the higher level of risk in off-plan project completion, Central Bank mortgage regulations have set the maximum loan to value (LTV) of 50% for mortgages on property being purchased off-plan regardless of purpose, value or category of purchaser. The client must be conscious of the detail that once payment has been made to the developer, the bank would start charging interest on the paid amount. Most banks have higher interest rates during the construction phase which would thereon be adjusted to a variable rate after project accomplishment.

Question of the Week: I am moving to Dubai with my family in September and wish to purchase an apartment. Could you please advise me on the mortgage process and down payment requirements?

Definitely, you can purchase an apartment in Dubai as a non-UAE resident and can also avail yourself of a mortgage facility here.

Currently, banks are financing up to 70% of the property value with profit rates from 4.99% to 5.5%; the maximum term of the mortgage is 25 years. The facility is available to clients who are willing to provide all documentation from their home country based on the nature of income they generate since the financial documents would differ accordingly. Also, if the client is willing to pay up to 50% of the property value, then with modest credentials, the loan application can be processed which would be fast and hassle-free.

After an initial assessment is conducted on the provided credentials, the bank would offer pre-approval. Subsequently, you have to allocate the property, keeping in line with your down payment competencies and transaction costs to execute the transfer process. After property valuation on the selected property is done, the bank would prepare the final mortgage offer letter and contract as per the agreed terms and conditions. The complete processing involves a sequence of steps that are completed within a couple of weeks.

Source: Dhiren Gupta, Managing Director, 4C Mortgage Consultancy


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