Ask the Agent - Regarding off-plan property purchases

When doing research to make a prudent decision, look for qualified brokers, and select a project from the approved list of developers and projectsDhiren Gupta, Managing Director, 4C Mortgage Consultancy

What key points should buyers take into consideration when selecting a property and looking for a mortgage?

The transition from being a leaseholder to a homeowner becomes convoluted if the homework is not done properly. Hence, understand how much you can afford and borrow. Scrutinise all recurring overheads associated with home ownership (down payment, Dubai Land Department cost, broker fee, community service fee, utility charges). Look for the best mortgage product that gives true value to your investment, but review your credit report and clean up all your debts first to decrease the chance of being denied a mortgage. Work on the pre-approval before finalising on a property. Typically, banks offer one or two-year fixed rate terms; thereafter, variable rates apply. Home ownership is an immense investment and a lifestyle change so consider everything when searching for a home and make sure you are financially prepared.

I plan to buy a Dubai property and noticed that I need to budget around 8 per cent on top of the property value to cover the fees. Can this be added to the value of the mortgage I take out?

If the buyer has a shortage of funds to cover property transaction costs, some financial institutions give the option of personal loan.

However, the bank will look into the buyer’s debt servicing ratio (DSR). If you qualify, you can utilise this facility.

As not every lender is facilitating such service, you need to be a little vigilant when selecting the lender.

Consulting with a mortgage broker can help you make a wise decision as they can guide you with the ideal product in the market which will meet your requirement. Furthermore, if you want to avoid getting into another loan, certainly look for a reduced property price, so you can have the property costing covered up by your savings itself.

Can I get equity finance based on rental value? I have a flat on lease and planning to buy more. Can you please advise on the best option.

There are some financial institutions in the market which are lending funds based on pure rental value.

However, it follows stringent due diligence which needs to be taken into consideration.

Certainly, there are some options in the market. But to get you qualified, your eligibility needs to be reviewed based on your rental income and property documents.

Banks have their defined minimum rental value to qualify for eligibility. Also, the funding rates and maximum loan values differ.

It is, therefore, advisable that you discuss your case with an experienced mortgage consultant who can guide you about the relative financial institution and how the process can achieve you the best mortgage terms based on your requirement.

How do you see the Dubai realty market now? Which areas in the emirate are resilient for investment?

The Dubai property market is close to bottoming out. Later this year, we expect more value growth especially in the affordable housing segment. A recent Dubai Land Department (DLD) research report reveals that the overall transaction value has seen an uptick, indicating a positive correction in the market. So, Dubai is still a safe investment haven.

Currently, the market paradigm proves momentous to the end-user segment who is aggressive in their home search. This has generated aggressive demand for mid to low-value properties.

However, prominent areas like Dubai Marina, Jumeirah Lakes Towers, Business Bay, Jumeirah Village Circle and Dubai Sports City are having a larger stake in the mortgage market.

And talking about the villa communities, Arabian Ranches, The Springs, Meadows and The Lakes are in the row.

Question of the Week: I am a non-UAE resident wishing to buy an off-plan property. Can you advise what due diligence I should do and what my mortgage options are.

Off-plan property purchases have been popular among investors due to innovative payment plans and prospective returns. When doing research to make a prudent decision, look for qualified brokers, and select a project from the approved list of developers and projects. Search for a developer with an excellent delivery track record.

Affordability, quality, community, convenience and location are prime focus which should be taken well into consideration as these can impact a property’s future return on investment.

Carefully read the fine print in the sales and purchase contract, especially the points related to penalties in case of project deferrals and reimbursement in case of withdrawal.

Ask about the annual service charges for communal facilities. Understand the associated buying costs which include Oqood registration fee and agent fee, among others.

Regarding off-plan property mortgage, finance is available but it is restricted to a few lenders and developers. As per Central Bank guidelines, the maximum loan to value for off-plan mortgage is 50 per cent regardless of purpose, value or category of purchaser. Secure a pre-approval first before deciding on a property to avoid pitfalls.

Source: Freehold


For Rent


View more properties

For Sale


View more properties