Mortgage when buying property in Dubai
At the end of 2013, the UAE Central Bank issued a new set of rules regarding mortgage lending. According to the new regulations, a non-UAE citizen is only entitled to borrow no more than 75% of the property valuefor the first real estate, which is valued at no more than AED 5 million (USD 1,360,000). If the property value is more than AED 5 million, then the borrower can receive no more than 65% of the property value. If this is the second purchase of real estate, then the maximum available loan cannot exceed 60% of the property value.
In the case of purchasing a property that has not yet been built, the maximum loan amount cannot exceed 50% of the full price. The regulations also state that the maximum mortgage term is 25 years and the maximum age of the borrower at the time of the last mortgage payment is 65 years, or 70 years if it is a self-employed person.
Costs And Terms When Buying Investment Property In The UAE
All transactions, including the sale and purchase of real estate, require registration with the department of the respective emirate. Registration fee is 2% of the sale price. In 2013, in Dubai, this fee was increased to 4%. In case of acquisition of a secondary property, an additional fee of one to two percent will be imposed. In addition, you must also pay an agent fee, which is usually between 2% and 5%. In the case of a mortgage, there is also a mortgage registration fee, which is about 0.25% of the collateralvalue. Flats in Dubai are most popular among foreigners because they have a relatively affordable price and tax amount will not be very high.
For properties not yet built, it is usually necessary to first pay an initial deposit of 10% to 15% of the total value. After that, you must conclude a detailed sales contract, and it is recommended that you write a payment plan there that would be associated with construction stages, instead of simply signing a commitment to make payments to the seller on specific dates.
In such a payment plan, tied to specific stages of construction, the total cost is paid when the finished property is handed over to the buyer, after which the registration and the issuance of a certificate of ownership at the Land Department of the respective emirate immediately takes place. It usually takes about 2-3 years from the moment you book the property until you receive the title deed in your name. However, in the case of resale, the process is faster. Once your offer to purchase is accepted, the seller’s agent will provide you with a sales contract. At this stage, you must pay a 10% deposit, which will be held by the seller’s agent. The seller must then receive a no-objection letter from the property developer. Once all documents are ready, the parties should make an appointment and meet at the land department to complete the process. You pay the remaining payment and the title deed is issued in your name. This process usually takes less than a month. If there is a mortgage or a loan from a bank, then the process can take 45-50 days, since the bank will still have to assess the value of the property.
Once a property certificate is issued in your name, you have certain responsibilities that you need to perform on a regular basis.
For example, these responsibilities include the following:
- It is very important that your property is insured. Accordingly, you will have to pay annual premiums for this insurance.
- Most emirates impose a municipal tax on rental payments of 5% for residential premises and 10% for commercial premises.
- Once you receive the property, you will have to pay a service fee to the developer or the property owner associations that handle maintenance, garbage collection, etc.
- You will also need to pay for utilities, water, gas, electricity, etc.
AX Capital Will Help You Buy Property In Dubai
AX Capital strongly recommends that before signing any legally significant documents, contact these departments to verify the registration of the developer and the project.