Looking to buy your first home in Dubai? It can be an overwhelming and challenging situation for you yet very exciting at the same moment.
It is a big decision and a huge financial commitment for you. So, its imperative to go in 100% prepared while paying attention to every detail. One should do an abundance of research and homework before looking into prospective properties
Here is a list of those 5 elements that one should follow before diving into decisions;
Allocate a budget
It is important to take into account your potential as well as long-term financial commitments to figure out your affordability and how much you can spend on your first home. You may automatically be restricted to getting a mortgage worth 75% of the property value if you are buying a ready property in Dubai, it is in your best interest to zero-in on a property that you’re comfortable paying for, without overwhelming your finances. You also have to account for bank fees, broker fees, government fees as well as the regular cost of home maintenance.
Down Payment & Booking amount
Your down payment of booking amount needs to be gathered in advance if you intend to buy a house on a mortgage. As an expat, you will have to put down at least 25 percent of the property value as down payment towards the purchase. If you don’t have such an amount, consider having a savings plan to systematically set aside a percentage of your income that will finance the down payment of your first home. You can boost the value of your savings by investing in bank deposits, bonds or stocks in case the plans of buying your home are still some time away.
Existing Debt or Loans
Before moving to buy your first home, you should make sure that there are no existing loans like credit card debts, student or personal loans. Existing high-interest debts will make it even 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 percent.
If you have solid plans about buying a home, you must apply for and secure for a mortgage pre-approval. If you don’t have one, Brokers may averse from showing you the properties.
For a Mortgage 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.