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There are many factors people need to do and avoid when purchasing their dream home. Some of the don’ts are as follows:
Considering it a short-term investment
The family home must provide a safe, secure and pleasant place for the family to live in – which means that in satisfying the needs of the family, it may not always be the most lucrative investment.Careful planning is required if you plan to move in just three or four years as the compounding value appreciation is maximised if the home is considered a long-term proposition.
Assuming rent and mortgage are the same
There are fundamental differences between rental and mortgage payments. You are much better off financially in spending dirhams towards building equity, but mortgage payments can be subject to fluctuations as interest rates rise. Excessive volatility in rents, meanwhile, is limited by law. In addition, there are additional costs associated with owning a home.
Making lifestyle sacrifices
Sacrificing some aspects of your life for the sake of owning a home is not a good way to develop a happy household. Give yourself financial and lifestyle flexibility by choosing a less expensive home and lower mortgage.
Not planning for the future
Think of your family’s future requirements. For example, your child may need to start school in a few years or you may be planning to have more children requiring more space. Remember, you are purchasing for your family’s future requirements as well.
The Dubai market today is a buyer’s market. It will not always be this way. If you have done your planning properly, you should be in a position to make a quick decision. You will never find your perfect home so don’t let cosmetic issues like paint colours, outdated décor or old appliances keep you from putting an offer in a home. If a house is priced well, in your desired location, is the right size and has a great layout, then make an offer.
Not shopping around for finance
Talking to mortgage providers helps you assess what is best for you. But not all mortgages are the same. The most common type of mortgage is known as the Capital and Interest (Reducible Balance) Repayment Mortgage, but you may also consider Interest-only Payments, Part Repayment and Part Interest-only Mortgages although these types of mortgages are usually used for very specific investment purposes. Try and have the mortgage establishment fees waived. Depending on the institution, this may save you up to Dh3,000.Also, request that you are not penalised for paying the mortgage faster or in its entirety. Make sure your mortgage provider will allow you to utilise the equity you build in your home over time. Some lenders will allow you to use this equity as security for further borrowing. This can be very handy if you want to make some major home improvements.
Trusting online home values
While the internet is a helpful tool for conducting basic research or comparing mortgage options, online home valuation sites can create unrealistic expectations. Always work with a reputable and experienced real estate agent and ask him to conduct a comparative market analysis for you. It will be more reliable.
Keeping all these considerations in check paves the way for you to take that big leap in the realty world with an informed decision.
Source: Mohanad Alwadiya, Special to Freehold
CEO, Harbor Real Estate