Your Guide to Buying Property in Dubai
There’s no denying buying property in Dubai is a hot topic for both local and international investors. With its stunning skyline, world-class infrastructure, and tax-friendly environment, the city has become a prime destination for property buyers.
Given it may be one the most significant financial decisions you’ll ever make, it pays to do your research and understand what’s involved before buying property in Dubai. This comprehensive guide will walk you through the steps and considerations, from understanding the legal framework to navigating the buying process and managing additional costs.
Before You Start
1. Is it Better to Rent or Buy in Dubai?
The first thing you should ask yourself before thinking about buying property in Dubai is:
“Is it better to rent or buy in Dubai?“
Renting may be the way to go if you’re new to Dubai, unsure about how long you’ll stay, or want to test out different neighbourhoods before committing. It offers flexibility and usually requires less upfront investment.
On the flip side, buying villa in Dubai can be a smart move if you plan to settle in Dubai for the long haul, want to build equity, or see property as an investment opportunity.
By evaluating whether renting or buying is the better option, you’re forced to reflect on your long-term plans and your financial situation, which leads us to the next important point.
2. Assess Your Financial Situation
You will need to make sure your financial situation is in order first before buying house in Dubai.
To get your finances in order, it’s a good idea to take a good look at your money situation.
If you haven’t already, take the time to create a budget – it’s more engaging than it sounds and can be quite eye-opening. Figure out how much you can realistically save each month for your future home.
This process will not only clarify your financial situation but also help you plan effectively.
As some people need a home loan to finance their purchase, engage with your mortgage broker early to see how much ‘home’ you can afford.
This is known as pre-approval. It’s basically the bank saying, “We’d be willing to lend you this much.” This gives you a clear idea of your budget and shows sellers you’re serious. Plus, it can save you from falling in love with a place that’s way out of your league.
Key Considerations:
- Down Payment: Depending on the loan type, down payments can range from 20% to 50% of the home’s purchase price.
- Debt-to-Income Ratio: Lenders will check your debt-to-income ratio (DTI) to ensure you can handle mortgage.
- Minimum Monthly Salary: AED 15,000. Self Employed: AED 25,000.
- Employment: Minimum 6 months at current company
- Age Limit: 21 years – 65 years old. 70 if self-employed.
8 Things to Know Before Getting a House Loan in Dubai
3. Research the Market: Where to Buy Property in Dubai
From luxurious beachfront villa to family-friendly and sustainable neighbourhoods, Dubai property market has something to offer for every taste and budget.
As a buyer and a seller, being familiar with where you want to move next will streamline your decision-making process.
Best Area to Invest in Dubai include:
- Business Bay
- Dubai Hills
- Dubai Marina
- Jumeriah Village Circle
- Dubai South
- Jumeriah Lakes Tower
- Palm Jumeriah
- Arabian Raches
- Jumeriah Beach Residence
If you’re considering selling and buying property as investment properties, you may also want to explore “top areas to invest near metro station” and ‘best areas for rental yield”. Understanding buyer demand in different areas can also help you price your property competitively.
If you’re considering selling and buying green-friendly properties for sustainable living, you may want to explore “top 6 eco-friendly communities in Dubai”.
4. Hire a Real Estate Agent
Working with a knowledgeable real estate agent is beneficial whether you’re looking to buy or sell. They have market insights, can negotiate deals, and guide you through the legal aspects of the transaction.
Benefits of Hiring an Agent:
- Pricing Expertise: Agents can help sellers set a realistic price based on current market trends.
- Market Access: They can connect you with listings not always available to the public.
- Negotiation Skills: A strong negotiator can help you get better terms on both your sale and purchase.
5. Understand the Legal Steps
Dubai has specific legal aspects to buying house in Dubai that buyers and sellers should be familiar with. Here are some key legal steps you should be aware of:
Key Steps:
- Agree The Terms Of Sale
- Sign The Memorandum of Understanding (MOU) – Form F
- Applying For NOC From the Developer
- Transferring Ownership At DLD Office
- Pay fees associated with property purchase
6. Get a Property Inspection in Dubai
It is always recommended to get a property inspection to evaluate the property’s condition. Getting professional evaluation can save you from unexpected expenses and help you make an informed decision.
As a buyer, if the inspection reveals significant issues, you have the opportunity to negotiate repairs or adjust your offer price. This can lead to substantial savings and ensure that you are not overpaying for a property that requires extensive work.
As a seller, getting a property inspection in advance can help avoid surprises that might delay or jeopardize the sale. Fixing any known issues beforehand will enhance your home’s appeal to potential buyers.
What to Expect in a Property Inspection in Dubai:
- Typically, snagging companies in Dubai charge around AED 1 per sq ft of Built Up Area + VAT.
- Inspection usually happens after the buyer makes an offer and there is an agreement between the buyer and seller.
- A home inspector is trained to identify potential problems that may not be visible during a casual walkthrough. In Dubai, snagging usually includes MEP (Mechanical, Electric, Plumbing), HVAC (Heating, Ventilation, and Air Conditioning) and pest infestations.
7. Securing a Mortgage
It’s important to explore your options early and get pre-approved when buying property in Dubai. It not only saves you time by narrowing down properties you qualify for, but also shows sellers you’re a serious buyer. A pre-approved is valid for 60 days.
Teaming up with a mortgage broker can help you explore offers from multiple lenders and discover the best option that fits your needs. It’s also helpful to learn what others wish they had known before getting a mortgage.
Mortgage Types to Consider:
1. Fixed Mortgage Rate
- Typically remain the same for a set period, usually 1-5 years
2. Variable Mortgage Rates
- Fluctuate based on the Emirates Interbank Offered Rate (EIBOR)
- Rates can change periodically, often monthly or every 6 months
Key Difference:
1. Fixed rates are locked in for a set period, while variable rates can change throughout the loan term
2. Fixed rates offer stability but may be higher
3. Variable rates have more uncertainty but potential for lower costs if rates decrease
4. Variable rates require more financial flexibility to handle potential payment increases
8. Making an Offer
Once you’ve identified the property you want, the next step is to make an offer. This can be a sensitive process, especially in competitive markets like Dubai.
Tips for Making a Strong Offer:
- Submit a Clean Offer: Keep your offer straightforward by avoiding contingencies that might make the seller hesitate.
- Offer Competitive Terms: Be flexible with closing dates and other terms to appeal to the seller.
- Have Your Financing Ready: A pre-approval letter will show the seller you’re serious.
9. Closing the Deal
Once your offer is accepted, you’ll move into the closing process. During this time, both buyer and seller will sign the necessary documents, and the property will officially change hands. Keep in mind there are always associated costs that come with buying and selling a property.
Closing Costs
Buyer’s Responsibilities:
- DLD Fees
- Registration Fees
- Agent Fees
- Conveyancing Fees
- NOC Fees
- Mortgage Registration Fees
Seller’s Responsibilities:
- DLD Fees
- Registration Fees
- Agent Fees
- Conveyancing Fees
- NOC Fees
- Transfer of Ownership Fees
- Mortgage Fees (Early Settlement Fee, Mortgage Release Fee, Blocking Fee)
10. Working with Contractors To Prepare Your New Home
When it comes to getting your new home ready, working with reliable contractors is a key part of the process. Start by considering the timing of your sale and purchase, and filter contractors through recommendations. Aligning the two can reduce stress.
Make sure to communicate your expectations clearly about timelines and budget, and be prepared for a few bumps in the road. Take the time to research how others have approached their renovations, and stagger your payments based on project milestones to keep everything on track.
Conclusion
Buying property in Dubai can be a multifaceted process that requires careful planning and preparation. By understanding the steps involved, this preparation not only will help mitigate your risks but also enhances your overall buying experience with confidence.
