Tips for first time home buyers in Dubai

If you’re sitting on the fence about purchasing versus renting this year, begin with doing your homework. Here are some handy tips to make your decision easier:

When purchasing completed properties for self-use:

• Identify 2-3 locations to look at based on your budget and key needs, such as actual unit size requirement (which varies from one project to another even for the same bedroom type), distance to workplace, schools, accessibility (especially during peak hours), among others.
• Shortlist further to key buildings based on the above and other features such as maintenance levels, service charges, amenities, balcony size (some buildings have a large balcony, which is often unnecessary but which you will end up paying for), etc.
• Given how quickly one has to move to finalise a purchase (within 1-2 weeks from a viewing), it is best to start having preliminary discussions with banks 2-3 months prior the estimated purchase time on what documents they will require to process the mortgage, what prevailing rates are, any discounts or special offers, etc. Then pre-approvals can be in place for the purchase.

For an off-plan purchase, the developer track record of delivery, association of some lenders for the project can help give an idea of the proposed development. Also, the investment potential of the project (expected rental yields), among other factors must be considered for an off-plan purchase. As with all high value purchases, the fine print of the sale agreement must be studied, especially in relation to the recourse buyers will have if project is delayed or even stalled.

There are some common mistakes made by first time buyers and it is important to steer clear of these at the outset:

• Moving forward with a purchase without understanding what the agreement offers to a buyer is the biggest mistake. This could include not having a clear understanding of the actual area that you’re paying for (how much percentage of it is the balcony for instance) or in off-plan properties, what recourse buyers have if developer delays or stalls the project. Thus, reading the fine print of the agreement is essential at the shortlisting stage.
• The equity contribution of a purchase is not limited to the property value. It includes other elements such as registration charges, loan arrangement fees, brokerage fee, which can be almost 7-7.5% of the value. Therefore, the budget should be set right in the beginning factoring all these costs in, to shortlist the right options and have a focused research process.
• While it certainly helps to hire experts such as mortgage advisers and brokers to arrange the deal, buyers sometimes do not spend the time they should on research themselves. Whether you’re investing or buying a property for self-use, getting a sense of the areas you’re shortlisting in terms of existing and proposed infrastructure, prevailing prices and rents (from trusted market reports), maintenance levels (from owners’ associations, for instance), is key to understanding the dynamics of different options.