UAE makes for the ideal real estate market from an investment perspective considering the availability of a wide array of real estate options like residences, villas, condominiums, apartments, single homes, luxury properties, etc.
The potential of getting a high return on investment on real estate investment adds to the popularity of mortgage options. The ease of buying property through mortgage has skyrocketed real estate investment in the Emirates. This article discusses the steps involved in the process of buying a house in UAE and offers a comprehensive guide to help you prepare for the big purchase.
The first step to buying a house in UAE is budgeting your finances. By budgeting, you will know the specific amount you have in reserve for the upcoming purchase also to cover the additional fees like the minimum bank deposit, agent fees, registration, etc.
Planning your finances keeps hassles at bay. You will get an idea of how much money will go into monthly instalments, and how much will remain with you to cover daily expenses and other requirements. It also helps to evaluate whether the property in question is affordable or not.
Step 2 - Securing a Suitable Mortgage
The physical exercise of buying a house in the UAE begins formally after you secure a mortgage. A stringent application process and documentation go into securing a mortgage from financial institutions. Given below is the list of basic documents you will need to apply for a mortgage in the UAE:
Pay slip from your employer
Salary/Offer letter from your employer
Your bank statements for the previous 6 months
The copy of your passport bearing both your photo and resident visa page
A copy displaying your Emirates ID
A copy of your in-use credit card statements (optional)
Address proof of your current residence
Although the home loan application process is uniform across the UAE, transfer fees vary from region to region and provider to provider. One thing to remember here is, arranging pre-approval or in-principle from the bank. It is helpful in determining how much you can get as the loan amount, whether you are eligible or not and more. Most lenders also ask for a minimum 20% down payment for financing a home in the UAE.
Step 3 – Getting a Mortgage Life Insurance
To get a home loan in UAE, you need to submit your mortgage life insurance papers to the lender. This is an important part of the loan application process. Getting a proper mortgage life insurance plan is mandatory to avail of any type of mortgage loan in UAE. Most lenders offer in-house mortgage life insurance as a benefit of the home loan. See if your lender offers the same benefit. If yes, you won’t need to secure it from a third-party provider. A home loan insurance policy can provide you with financial cover if you are not able to pay your EMIs due to any unforeseen reason.
Step 4 - Getting a RERA-Qualified Broker
Brokers have substantial knowledge of the real estate market and hence ensure that buyers are not devoid of investment legalities and ownership rights when buying a house in UAE. It is recommended by experts that when searching for an agent, look for a Dubai Real Estate Regulatory Agency (RERA) D Certified broker. The advantage of RERA-qualified brokers is that you can sign a Form B contract that entails your broker representing yourself in upcoming property negotiations to finalise the best deal for you.
Step 5 - Finding a Good Local Conveyancer
Whether you choose to buy a house through a RERA-certified broker or on your own, one thing you will need is a supportive conveyancer. A good conveyancer will quote optimal charges as per the shifting distance as well as take extra care to ensure your furniture and belongings do not get damaged during the move. Finding conveyancers online is the easiest way to facilitate the home shifting process.
Step 6 - Signing the Memorandum of Understanding (MoU)
Once you are fully content with the property, you should proceed with signing the MoU or the sales agreement. RERA-certified brokers can significantly ease the process of home buying in the UAE. First-time buyers in the UAE must be very careful as the maximum information in the MoU is technical. You can ask your broker to help you go through the terminology of the MoU.
Both buyer and seller i required to sign the MoU in the presence of a witness which is generally the agent/broker. Buyers are asked to produce a cheque in the name of the seller as a 10% deposit and present it to the registration trustee. The deposit is returned once the transfer has been finalised. The MoU includes all the elements of the home-buying contract including the duration of time allowed until the final transfer, paid rent, service charges, etc. Revise all things that need mention in the document.
Step 7 - Getting the No-Objection Certificate
Once the MoU is prepared, it is now time to request a valuation of the property. Valuation of the property by the bank may take about 3 to 4 days. Once the valuation is done, the bank starts drawing the final mortgage contract which may take 2 to 7 days. Meanwhile, the seller applies for a No-Objection Certificate (NOC) which takes up to 3 to 5 days to arrive.
This is done to ensure that both the buyer and the seller are clear about the property ownership and there are no objections or dues related to their previous dealings. The whole process generally takes about 10 days in total.
Step 8 - Final Transfer of Ownership
Transfer of property is the final step in the process of buying a house wherein the bank disburses the money they are providing as a house Loan in UAE to the borrower. On the day of the final transfer of the property, the buyer is required to bring along all the necessary documents. All the parties involved meet including the broker, conveyancer as well as seller for the completion of the final step.
The buyer can choose between buying a house in cash or using the0020manager's cheque – which should be ready before the time allotted for the meeting. You, as a buyer, will also need a cheque for 4% of the valuation of the property as the DLD transfer fees and administration fees to be sent to the DLD office. After the title deed is ready, the keys and access cards of the property are handed over.
In a Nutshell
Owing to multiple legal and non-legal benefits, UAE’s property market has been attracting buyers and sellers from all over the world, across varying income brackets. Real estate is booming in the UAE as more information related to the tips and strategies for buying a house in UAE through a mortgage becomes easily available.
It is important to be aware of every small step and formality that goes into purchasing a property in the emirates if you are a potential buyer who wants to invest in the real estate market. Depending on your choice of payment method, it is also recommended to check out the various options available for securing a house Loan in UAE. Making a properly informed choice is crucial to ensure that your money is invested in a worthwhile prospect. You may take assistance from our financial experts for the same as well.
Home Loan Balance transfer in UAE - Get the complete info about home loan balace transfer as charges, eligibility, features & benefits, how to calculate home loan transfer EMI, How to transfer home loan from One Bank to Another, & more.
Home Loan After Retirement - Here we have mentioned some tips about how to get a home loan for a retired person, the documents required, and the eligibility criteria to obtain a mortgage loan in UAE after retirement.
Home Loan Prepayment in UAE - Know the top 5 factors to consider before prepaying your home loan as - Stage of your home loan, If the loan repayment requires you to break your emergency fund , EMI reduction Vs loan tenure, & more.
Home Loan approval factors in UAE - Know what factors top UAE Banks to consider for home loan & mortgage loan Approval as- Documents Submitted, Credit History and Score, Credit Utilisation Ratio, Debt-to-Income Ratio, Current Income and Expenses, & More.
Home Loan Pre-Approval in UAE - Get the complete info about Home/Mortgage Loan Pre-Approval like - Home Loan Pre-Approval Process, Factors that Impact, & How to Increase Your Chances of Getting Home Loan Pre-Approval.
Top 5 reverse mortgage mistakes in UAE- We will help you understand these 5 mistakes you need to avoid when taking on a reverse mortgage loan to make it easier for yourself as well as your dependents and children.