Things you must know before buying a property in Dubai

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Whenever I meet with someone who has an interest in buying property in Dubai, there is a certain repeated question that I get asked over and over again. As a real estate consultant in Dubai, it is my utmost responsibility to provide my clients with best and authentic information so that they can make a wise decision.

With the help of the internet, it has become very easy for anyone to find any kind of information however the only problem with online research while buying a property in Dubai is that, most often the information comes into pieces, making it very difficult for a person to stay on track of his research. That’s why we will try here to list the most important things to be considered.

Find out what you can afford. It is important to take into account your earning potential as well as long-term financial commitments to figure out how much you can actually afford to spend on your first home. While you may automatically be restricted to getting a mortgage worth 75 percent of the property value if you're buying a ready property in the UAE, it is in your best interest to zero in on a property that you're comfortable paying for, without overwhelming your finances. And remember, you also have to account for bank fees, broker fees, government fees as well as the regular cost of home maintenance.

Fund your down payment. If you intend to buy a house on mortgage, you have to start gathering the funds for your down payment well in advance. As an expat, you will have to put down at least 25 per cent of the property value as a down payment towards the purchase. If you still haven't saved up enough, consider starting a savings plan to systematically set aside a portion of your income to finance your first home. Follow a budget to maximize your savings and cut down on unnecessary overheads. If your plan to purchase property is still some time away, you can also invest your savings in bank deposits, bonds or stocks to boost their value.

Get rid of existing debt. If you are still enduring the aftermath of credit card debt, student loans or other personal loans, you must work towards paying these off as soon as possible. Any high-interest debt you owe is only going to make it more difficult for you to qualify for a mortgage. Existing debt installments will increase your debt burden ratio (DBR) and banks won't offer you home finance if your DBR exceeds 50 per cent, i.e., if more than half of your monthly income goes towards repaying debt.

Get your mortgage pre-approval in place. If you're serious about buying a home, you must secure a mortgage pre-approval. If you don't have one, real estate brokers may be reluctant to show you properties. To get pre-approval, banks will require you to submit the documents verifying your eligibility for home finance, like salary statements, letter from your employer, and copies of your passport, visa, and Emirates ID. It is also important to do your research around interest rates and bank fees before you pick a bank.

Reorganize your budget. A huge chunk of your savings will go towards the down payment, but that isn't all. You will also have to account for the impact of regular mortgage installments on your existing budget. Therefore, you will have to set a new budget that will work for your newfound status as a homeowner. You will also have to allocate a percentage of your income towards new expenses like higher utility bills and maintenance costs. And you may even have to save up more in case you plan on pre-paying a little extra towards the mortgage every year.

I am hoping that the above information has been helpful for you.

Junaid Iqbal Mohammed Memon is the founder of Cloud 9 Group. A property developer based in Dubai, he is always on the lookout for profitable development ventures and has several residential projects under his belt. Connect with the  Junaid Iqbal Mohammed Memon on Crunchbase here and join our network. Like the official  Junaid Iqbal Mohammed Memon Facebook page here and keep up to date with the latest Dubai property posts.

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