Expert Eye

Purchasing a home? Plan carefully

Eliminate any surprises by conducting careful planning and due diligence

There is no doubt that the Dubai real estate market presents some fantastic opportunities for both investors and first-time home buyers. For the latter, there is no better time to take advantage of the value that is currently on offer and start to build a solid financial future.

However, just because the market is currently strongly in favor of buyers doesn’t mean that careful planning and due diligence should not be adhered to. There is never a market scenario which demands hasty decisions; the markets will always demand and reward timely decisions. This is an important distinction to make as taking shortcuts in preparation and planning, particularly in financial planning, is a common shortcoming of investors and home buyers who are keen to take advantage of the varied opportunities.

One area that is often overlooked is the many additional costs “of buying, owning and occupying a home. Many first-time home buyers tend to only focus on the purchase price and mortgage costs and forget that there are other costs to be considered.

Assuming you have con ducted a thorough search and have identified the property that you would like to buy, your negotiated buying price will be subject to a 4% property registration fee at the Dubai Land Department (DLD). You may be taking advantage of some recent payment plans whereby the transfer of ownership and registration fees are deferred until all payments are satisfied; regardless, it is a cost that you need to cover eventually. There will also be a charge of .25 % of the value of any mortgage payable at the-time of registration.

Speaking of mortgages, most lenders require property insurance and you would, in all likelihood, wish to insure your belongings. This is in addition to the loan protection insurance that you need to take out as a prerequisite to finalizing your mortgage so that your spouse and children are protected from having to pay down the mortgage if you should pass away prematurely. You may also consider other forms of insurance covering disability and terminal illness.

Every building or community requires maintenance and operational management. So, you need to understand what fees you will pay to those who will provide the services that make your new home a secure place to live. Fees can vary depending on your location or the development you are part of, so ascertain what you will pay before you sign the purchase agreement.

 Then there are the costs of actually occupying your home. It starts with paying deposits to set up utility accounts followed by monthly utility bills for electricity, gas and water, as well as Pay TV, telephone and Internet services.

Then there are the moving costs. If you are a single or a young couple, you may be able to handle this yourself. For some families, moving may require renting a truck or hiring a moving company.

 Of course, you need to consider the additional new furniture or decorative items you need to buy so that your new home lives up to the vision that inspired you to buy it in the first place.

If you have purchased a new villa, you will want to do some landscaping. This may include the addition or modification of outside entertainment areas such as patios or BBQ areas, design or redesign of plants, trees, shrubs and pathways along with the establishment of a healthy and robust lawn. Play equipment for children may need to be purchased along with additional items such as security systems, fencing or exterior lighting.

Thus, planning a home purchase entails more than just figuring out what your mortgage payments may be. With careful planning, you can eliminate any surprises with your next purchase.

Expert Eye – Gulf News

Home buying process explained

Purchasing a property in Dubai is relatively straightforward yet, as with the purchase of any property anywhere, there is a series of checks and requirements that must be completed to ensure a successful and issue-free transaction takes place.

Depending on a number of factors, it typically takes between two and six weeks to complete a property transaction.

Financial advisor. The first step is to consult a financial advisor who can help you determine what you can realistically afford.

Pre-approved mortgage. You should then obtain a pre-approved mortgage, if required. This is important as it can prevent any disappointment or embarrassment later on. .

Hiring a real estate broker. Then it is time to select a registered broker or agent. A good property broker will add value by finding the property that meets your requirements, saving you money, minimising your risk, ensuring you are legally compliant and providing you with peace of mind, allowing you to make the best decision possible.

Checking out available properties. Searching for the property of your dreams can be a frustrating and time-consuming experience.

While you can delegate this to your appointed property broker, I recommend you conduct your own search as well.

It will assist you in gaining an appreciation of what product is available in your budget range, where it is located and which facilities and amenities will be able to meet your needs.

It will also show you whether the property that you are seeking is rare or whether availability is high. This is important as it will affect your negotiating ability

Background checks. Once you have identified a property that is of interest to you, your broker should complete all the necessary background checks to ensure there are no impediments to a successful sale.

This would include establishing the ownership status of the property (is it mortgaged?), the occupation of the property, the availability of the owner to negotiate and conclude the transaction, among several other factors.

Making an offer. Assuming all is in order, you may proceed to make an offer.

Memorandum of understanding. Once your offer has been accepted, you will need to sign a memorandum of understanding (MOU) which details the terms, costs and responsibilities of both parties as agreed.

  1. You will then provide a deposit of 10 per cent of the purchase price of the property.

Property valuation. If you have applied for a mortgage on the property, your bank will be informed as to your intentions and will carry out a valuation on the property. The inspection is typically completed by a third party engaged by the bank to provide professional property valuations.

‘No Objection Certificate.’ Assuming all is in order and the bank gives the go-ahead, the seller will apply for a “No Objection Certificate” (NOC) from the developer.

Make an appointment at the DLD. An appointment is then made with the Dubai Land Department (DLD) to complete the transfer. The seller, buyer, their respective agents and, if necessary, their bank representatives all attend to formalise the transfer. When all documents have been checked and details have been registered, and you have paid the seller of the property, the agency commissions, and 4 per cent transfer fee (plus Dh315) to the DLD, you will receive the title deed.

You can then start celebrating. Your dream house is now in your hands!