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I have a property in JLT under my sole name. Is it possible to include my cousin’s name as a joint owner? If yes, what are the procedures, fees and charges involved? Will it affect the bank loan?
You can include your cousin’s name as a joint titleholder but if the property is on mortgage, wait for the loan to complete or settle the outstanding amount with the bank first.
To assign your 50 per cent property share on your cousin’s name and include him/her as a joint owner, you need to apply for an NOC with the developer to process the modification in the ownership status. You both have to sign Form F available online. To complete the process, visit any real estate registration trustee office where you may pay 2 per cent of the property value as a transfer fee since you are selling half the property share to your cousin, along with Dh2,000 admin charges and Dh580 fee for the new title deed.
Will there be more Fed rate hikes this year? What advice will you give property holders taking home loans or remortgages?
Mortgage is a long-term obligation; thus, one needs to tactically programme the route. With most UAE banks proposing fixed rate terms providing selections for variable rates, it becomes imperative to comprehend the implications of the floating rate as it covers the majority shares of the mortgage repayments. Since interest rates are likely to go up for the second time in the US market, expect a measured impact here, too. Assuming the contrary effect to happen, the UAE property market could be affected which may further check the spirit of the mortgage market. Bearing in mind the current rise in interest rates which is minimal, potential homeowners must pick fixed rate terms. Mortgagors on adjustable or variable rate terms must remortgage the loan and secure fixed terms to shield from fluctuations.
I am planning some real estate investment to establish my portfolio. Can you explain the capitalisation rate calculation and how to estimate ROI.
Capitalisation rate (cap rate) is a rough calculation to estimate the payback period of a real estate investment. It’s the rate of return on investment (ROI) based on the income that the property is projected to produce. The cap rate is the fraction of the net operating income (NOI) of the property value which evaluates the appraisal on budding ROI. It may be calculated by dividing the investment’s NOI by the current market value. NOI is the total income derived from a property rental less operating costs. Since the asset values of properties in Dubai show greater instability, be cautious in reckoning the income being derived. Study the NOI being generated from the property at the current property value to identify if the property’s capital-generating performance is evolving or declining. If the cap rate ratio depreciates, the investor should sell the property and invest somewhere else.
I am planning to refinance my existing mortgage. What are the additional fees? How to retain low costs?
Refinance costs a little extra; however, if considered in the long term, it gives substantial savings and minimises extra costs. The current departing cost usually runs nearly 1 per cent of the remaining loan amount which comprises property evaluation, application fee, Dubai Land Department charges, and property and life insurance charges.
Existing borrowers have larger elasticity as banks concentrate on giving practical rates and terms for refinancing in which the cost of the transaction expels unnecessary forfeits when banks relinquish processing fees and offer free assessments, making one secure better rates. Before considering refinance, check whether savings counterbalance refinancing costs. Review different deals, discuss different options, talk about preferment and extra remunerations which might be offered by different banks, and estimate break-even to save extra.
Question of the Week: I am a first-time property buyer. With so many options prevailing in the market, I am a bit confused where to invest – ready or off-plan? Can you guide what I should consider in the current market scenario?
It is based on individual investment perspective. Either stand with the prompt cash flow income-generating investment which refers to ready property or bank on a forthcoming market price considered under-construction project. Both investments involve pros and cons which should be measured before investing.
In Dubai, when you invest in income-generating ready property, the net return on investment holds around 7 to 8 per cent and even jumps to 10 per cent. Still, this yield gets constructed on various factors which need accurate study while deciding on the property like location, neighbourhood, construction quality, developer and community development. Before investing, structure the deal in such a way that in the long term, it safeguards high rental yield.
If you prefer to wait to relish investment profit, off-plan projects offer an additional reward payment system, which forestalls the highest return with market evolution. Perform the appropriate due diligence and shop around for developments that fit into your financial approach, fulfil investment yield and give capital appreciation.