Purchasing a home? Plan carefully

Home purchaseMohanad Alwadiya

There is no doubt that the Dubai real estate market presents some fantastic opportunities for both investors and first-time home buyers. For the latter, there is no better time to take advantage of the value that is currently on offer and start to build a solid financial future.

However, just because the market is currently strongly in favour of buyers doesn’t mean that careful planning and due diligence should not be adhered to. There is never a market scenario which demands hasty decisions; the market will always demand and reward timely decisions. This is an important distinction to make as taking shortcuts in preparation and planning, particularly in financial planning, is a common shortcoming of investors and home buyers who are keen to take advantage of the varied opportunities.

One area that is often overlooked is the many additional costs of buying, owning and occupying a home. Many first-time home buyers tend to only focus on the purchase price and mortgage costs and forget that there are other costs to be considered.

Assuming you have conducted a thorough search and have identified the property that you would like to buy, your negotiated buying price will be subject to a 4% property registration fee at the Dubai Land Department (DLD). You may be taking advantage of some recent payment plans whereby the transfer of ownership and registration fees are deferred until all payments are satisfied; regardless, it is a cost that you need to cover eventually. There will also be a charge of .25% of the value of any mortgage payable at the time of registration.

Speaking of mortgages, most lenders require property insurance and you would, in all likelihood, wish to insure your belongings. This is in addition to the loan protection insurance that you need to take out as a prerequisite to finalising your mortgage so that your spouse and children are protected from having to pay down the mortgage if you should pass away prematurely. You may also consider other forms of insurance covering disability and terminal illness.

Every building or community requires maintenance and operational management. So, you need to un-derstand what fees you will pay to those who will provide the services that make your new home a secure place to live. Fees can vary depending on your location or the development you are part of, so ascertain what you will pay before you sign the purchase agreement.

Then there are the costs of actually occupying your home. It starts with paying deposits to set up utility accounts followed by monthly utility bills for electricity, gas and water, as well as Pay TV, telephone and Internet services.

Then there are the moving costs. If you are a single or a young couple, you may be able to handle this yourself. For some families, moving may require renting a truck or hiring a moving company.

Of course, you need to consider the additional new furniture or decorative items you need to buy so that your new home lives up to the vision that inspired you to buy it in the first place.

If you have purchased a new villa, you will want to do some landscaping. This may include the addition or modification of outside entertainment areas such as patios or BBQ areas, design or redesign of plants, trees, shrubs and pathways along with the establishment of a healthy and robust lawn. Play equipment for children may need to be purchased along with additional items such as security systems, fencing or exterior lighting.

Thus, planning a home purchase entails more than just figuring out what your mortgage payments may be. With careful planning, you can eliminate any surprises with your next purchase.

Source: Mohanad Alwadiya, CEO, Harbor Real Estate, Special to Freehold


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