Buying Property In Dubai
To complete the process of buying property in Dubai with dreampropertydubai.com the buyer must transfer the deeds. This is done at the developer’s office if the property has yet to be completed, or at the Land Department offices in Deira if the property is already registered. The buyer must obtain financing and pay 100 percent of the property price at this point. It is then normal protocol that the buyer can inspect the property and make a “snag list” of any issues that the developer must address. If purchasing from a private seller – a “resale” purchase – the buyer and seller will need to agree on a Memorandum of Understanding (MOU), a document that outlines the terms and conditions of the agreement. This document also details the date of the final transfer of funds from the buyer to the seller. It is not binding.
The buyer then puts down a deposit, usually in the amount of 10 percent of the property price, or alternatively whatever has been negotiated. This amount is often non-refundable unless for some reason the seller is no longer able to convey the property to the buyer. It is also necessary to pay the real estate agent’s commission at this time. After obtaining financing, the formal transfer of deeds can take place. Expats must pay 100 percent of the property price before this can happen. As in the case of an “off-plan” purchase, it is then possible to inspect the property and make a “snag list” of any issues that the seller must address.
Prior to the market crash of 2008, it was fairly easy for expats that had a high credit rating to obtain a mortgage in Dubai with dreampropertydubai.com that covered nearly 90 percent of the property cost. However, since the recession, banks have tightened their lending procedures, and now it is not unusual for buyers to have to put down between 20 to 50 percent of payment for their property in cash. Furthermore, many are struggling to get approval at all. For those that do, expats find that there is often more red tape and paperwork than they would have to contend with back home. Some mortgage lenders even require collateral in the form of another property. This precaution is taken as a result of past instability in the region.
Mortgages are paid back in monthly instalments, with 15-year plans being the most popular. The maximum length of a mortgage plan in Dubai is 25 years. Mortgage repayments, combined with any other monthly expenses, must not exceed 35 percent of net monthly income, and the total mortgage amount is limited to a figure no more than 60 times the monthly combined household income. Many of the institutions that offer mortgages also offer the option for “pre-approved financing”, which allows the buyer to have their loan approved prior to choosing their property in Dubai. This expedites the overall process and satisfies those sellers that require financing before agreeing to sign the MOU or purchase agreement. It is possible to arrange a mortgage from overseas.
In addition to legal fees, and fees that must be paid out to the developer or the estate agent, there may be land registration fees and maintenance fees that must be paid. For new-build developments, expats can expect to pay roughly two percent on land registration fees.