Ask the Agent - Would it be better to stay in a rented accommodation?

Ask the Agent - Would it be better to stay in a rented accommodation?Dhiren Gupta, Managing Director, 4C Mortgage Consultancy

- I paid 10% deposit on an apartment. The seller didn't get the NOC from his bank yet and the transfer of the title deed hasn't happened. Please advise.

Yours is a typical case wherein the developer, who is also the seller, has a loan on the apartment. We need to understand on what basis the seller's bank is not issuing an NOC. Normally, the seller's bank issues a liability letter addressing the buyer's bank to settle the liability upon which the buyer's bank would prepare the manager's cheque and submit it to the seller's bank. It should not take more than seven days to settle the liability and release the documents to execute the transfer. However, in the MOU signed by both parties, there is a clause which indicates that if either party fails to produce the required documents, the deal would be null and void. The party which fails to do so needs to compensate the other party. The seller failed to get an NOC from the bank; thus, you have the right to present your case in RERA.

- I have two properties in Dubai and am willing to sell the one with a mortgage. Is this a good time to sell a property, or is refinance a better option?

Understand your property and target market. Study the current market trends and analysis with reference to property location. See how much gain you have achieved on the property investment in terms of annual ROI and capital appreciation. As you want to sell the mortgaged unit, know whether your current interest or profit rate is as per industry standards, or you might lose on your net investments. If you have identified the current market trends and they are not favourable for selling and if your existing mortgage rates are high, then refinancing should be the ideal solution. Also, bank finance rates are historically lowest to get the best deal, which can inversely increase your ROI on your property investment, considering the stable rental index and lower monthly instalment. Moreover, you might gain equity on the property which can be reinvested in other financial markets.

- I am moving back to Germany. I own a mortgaged property here; is it possible to transfer it in my brother's name?

Transfer of ownership is possible wherein you need to sell the property to your brother. As you have an existing mortgage, you need to inform your lender about it. They would advise you on the process and formalities. It is advisable for your brother to get a mortgage from the same bank to hasten the process, but he has the freedom to choose any bank. The procedure would be the same like any other property purchase. You both need to sign an MOU mentioning the selling price and give it to the bank for valuation along with the floor plan and title deed copy. Once valuation is done, the bank will offer you the approval letter based on new mortgage rates and terms. Once you sign it, the bank will process the buyout and your brother will be paying the land transfer charges and other related fees to have the title vested in his name. Then the transfer will be done.

- I bought my house in 2010 for Dh1M with an interest rate of 5%. I tried to refinance, but when I checked the current market price, it's Dh700,000. Can I challenge its appraisal value?

Current market valuation has become a concern in most mortgage transactions as it's been falling short of expected price, a nightmare for buyers and existing customers who want to avail themselves of refinance. However, valuation is a rational judgment tool to regulate the fair price of a property and is mandatory for mortgage. Most banks have a panel of agencies which conducts valuation. There can only be a thin line of possibility of getting a higher valuation from other agencies; thus, even if you want to challenge the appraisal value and consider a re-evaluation with another agency, it might not be that favourable as they all follow strict guidelines. To get a lower rate, approach your existing lender and negotiate to restructure your loan to a lower rate. Normally, they would relax the rate for a year, giving you breathing space to rethink your options.

- Question of the Week: I plan to buy a property but seeing the current market, I am worried about the prices. If I need to relocate in a few years, I would not be able to sell my property. Would it be better to stay in a rented accommodation?

This has been a concern which most expats face when they fall under the dilemma of renting or owning a house. There are many factors which should be considered when judging the correct decision. The current mortgage market does entice you to consider your options to enter the property market due to reducing lending rates fuelled by falling prices in the realty sector. Also, the rental index has still been unwavering across Dubai, which can again motivate you to invest either for yourself or even buy to let. However, you need to understand that the amount of contribution which you must consider when owning a property in Dubai is around 33 per cent of the property value including the transaction cost which can be a substantial figure depending on the size of the unit. A large number of the expat population in the UAE still stay in rented property as they do not want to risk their hard-earned savings after witnessing the serious consequences of the past downfall; they prefer an investment in the home country as a better option. Therefore, you need to be careful when deciding on your options, which can be complemented by the amount of risk appetite you have along with time factor.

Ask the Agent - Are there advantages of buying off-plan now?

Source: Dhiren Gupta, Special to Freehold

The writer is Managing Director - 4C Mortgage Consultancy

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